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  • MIL-OSI: Astera Labs Announces Financial Results for the Fourth Quarter of Fiscal Year 2024

    Source: GlobeNewswire (MIL-OSI)

    • Record quarterly revenue of $141.1 million, up 25% QoQ and up 179% YoY
    • Fiscal 2024 record revenue of $396.3 million, up 242% versus the prior year
    • Ramping across diverse set of customers and platforms with four product families in fiscal 2025

    SANTA CLARA, Calif., Feb. 10, 2025 (GLOBE NEWSWIRE) — Astera Labs, Inc. (Nasdaq: ALAB), a global leader in semiconductor-based connectivity solutions for cloud and AI infrastructure, today announced preliminary financial results for the fourth quarter and full fiscal year 2024, ended December 31, 2024.

    “Astera Labs delivered strong Q4 results, with revenue growing 25% versus the previous quarter, and capped off a stellar 2024 with 242% revenue growth year-over-year,” said Jitendra Mohan, Astera Labs’ Chief Executive Officer. “The revenue growth in 2024 was largely driven by Aries PCIe Retimer products, with Taurus Smart Cable Modules for Ethernet coming in strongly in Q4. We expect 2025 to be a breakout year as we enter a new phase of growth driven by revenue from all four of our product families to support a diverse set of customers and platforms. This includes our flagship Scorpio Fabric products for head-node PCIe connectivity and backend AI accelerator scale-up clustering.”

    Fourth Quarter of Fiscal 2024 Financial Highlights

    GAAP Financial Results:  

    • Revenue of $141.1 million, up 25% sequentially and up 179% year-over-year
    • GAAP gross margin of 74.0%
    • GAAP operating income of $0.1 million
    • GAAP operating margin of 0.1%
    • GAAP net income of $24.7 million
    • GAAP diluted net earnings per share of $0.14

    Non-GAAP Financial Results (excluding the impact of stock-based compensation expense and the income tax effects of non-GAAP adjustments):

    • Non-GAAP gross margin of 74.1%
    • Non-GAAP operating income of $48.4 million
    • Non-GAAP operating margin of 34.3%
    • Non-GAAP net income of $66.5 million
    • Non-GAAP diluted earnings per share of $0.37

    Full Year Fiscal 2024 Financial Highlights

    GAAP Financial Results:  

    • Revenue of $396.3 million, up 242% year-over-year
    • GAAP gross margin of 76.4%
    • GAAP operating loss of $116.1 million
    • GAAP operating margin of (29.3%)
    • GAAP net loss of $83.4 million
    • GAAP diluted net loss per share of $0.64

    Non-GAAP and Non-GAAP Financial Results (excluding the impact of stock-based compensation expense and the income tax effects of non-GAAP adjustments):

    • Non-GAAP gross margin of 76.6%
    • Non-GAAP operating income of $119.6 million
    • Non-GAAP operating margin of 30.2%
    • Non-GAAP net income of $143.3 million
    • Pro forma non-GAAP diluted earnings per share of $0.84

    Full Year Fiscal 2024 Business Highlights

    • Introduced new portfolio of Scorpio Smart Fabric Switches purpose-built for AI infrastructure at cloud-scale. The Scorpio Smart Fabric Switch family features two application-specific product lines with a multi-generational roadmap, including the P-Series for GPU-to-CPU/NIC/SSD PCIe Gen 6 connectivity and the X-Series for platform-specific, back-end AI accelerator clustering. Scorpio is currently shipping in pre-production quantities.
    • Joined the Ultra Accelerator Link Consortium as a promoting member on the Board of Directors. UALink technology will be used to enable efficient high-speed scale-up connectivity between AI accelerators within large and growing cluster sizes for AI workloads. Astera Labs is well positioned to quickly contribute to this new and compelling industry initiative to develop and advance UALink technology.
    • Demonstrated the industry’s first end-to-end PCIe optical connectivity link to provide extended reach for larger, disaggregated GPU clusters. PCIe over optics expands Astera Labs’ widely deployed and field-tested Aries family of Smart DSP retimers and Smart Cable Modules (SCMs) to deliver robust PCIe and CXL connectivity in chip-to-chip, box-to-box, and rack-to-rack topologies throughout the data center.
    • Expanded the widely deployed and field-tested Aries PCIe/CXL Smart DSP Retimer portfolio with the introduction and initial shipment of Aries 6 Retimers, the industry’s lowest power PCIe 6.x/CXL 3.x Retimer solution, to achieve higher bandwidth and extended reach across complex AI and compute topologies.
    • Shipped Aries PCIe/CXL Smart Cable Modules for Active Electrical Cable applications to enable multi-rack GPU clustering and low-latency memory fabric connectivity within AI infrastructure. The solution drives seven meters of reach over flexible copper cables to seamlessly and affordably interconnect clusters of GPUs across rack enclosures.
    • Showcased the first public demonstration of end-to-end interoperability between a PCIe 6.x Switch and a PCIe 6.x SSD at DesignCon 2025. The PCIe 6.x link-up was between an Astera Labs Scorpio P-Series Fabric Switch and Micron’s PCIe 6.x SSDs and showcased remarkable sequential read speeds exceeding 26GB/s.

    First Quarter of Fiscal 2025 Financial Outlook

    Based on current business trends and conditions, Astera Labs estimates the following:

    GAAP Financial Outlook:

    • Revenue within a range of $151 million to $155 million
    • GAAP gross margin of approximately 74%
    • GAAP operating expenses within a range of approximately $113 million to $114 million
    • GAAP tax expense of approximately $3 million
    • GAAP diluted earnings per share within a range of approximately $0.03 to $0.04 on weighted-average diluted shares outstanding of approximately 180 million

    Non-GAAP Financial Outlook (excluding the impact of approximately $47 million of stock-based compensation and including approximately $3 million of additional income taxes):

    • Non-GAAP gross margin of approximately 74%
    • Non-GAAP operating expenses within a range of approximately $66 million to $67 million
    • Non-GAAP tax rate of approximately 10%
    • Non-GAAP diluted earnings per share within a range of approximately $0.28 to $0.29 on non-GAAP weighted-average diluted shares outstanding of approximately 180 million

    Earnings Webcast and Conference Call
    Astera Labs will host a conference call to review its financial results for the fourth quarter and full year of fiscal 2024 and to discuss our financial outlook today at 1:30 p.m. Pacific Time. Interested parties may join the conference call by dialing 1-800-715-9871 and using conference ID 5908687. The call will also be webcast and can be accessed at the Astera Labs website at https://ir.asteralabs.com/. The webcast will be recorded and available for replay on the company’s website for the next six months.

    Discussion of Non-GAAP Financial Measures
    We use certain non-GAAP financial measures to supplement the performance measures in our consolidated financial statements, which are presented in accordance with GAAP. A reconciliation of these non-GAAP measures to the closest GAAP measure can be found later in this release. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP tax rate, non-GAAP net income (loss), non-GAAP diluted earnings (loss) per share, and non-GAAP weighted-average share count. We use these non-GAAP financial measures for financial and operational decision-making and as a means to assist us in evaluating period-to-period comparisons. By excluding certain items that may not be indicative of our recurring core operating results, we believe that, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP tax rate, non-GAAP net income (loss), non-GAAP pro forma diluted earnings (loss) per share, and non-GAAP pro forma weighted-average share count provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.

    No reconciliation is provided with respect to the forward-looking non-GAAP financial measures included in our non-GAAP financial outlook, as the GAAP measures are not accessible on a forward-looking basis. As a result, we cannot reliably predict all necessary components or their impact to reconcile such financial measures without unreasonable effort. The events necessitating a non-GAAP adjustment are inherently unpredictable and may have a significant impact on our future GAAP financial results.

    We adjust the following items from one or more of our non-GAAP financial measures:

    Stock-based compensation expense
    We exclude stock-based compensation expense, which is a non-cash expense, from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, companies calculate non-cash stock-based compensation expense using a variety of valuation methodologies and subjective assumptions. Moreover, stock-based compensation expense is a non-cash charge that can vary significantly from period to period for reasons that are unrelated to our core operating performance, and therefore excluding this item provides investors and other users of our financial information with information that allows meaningful comparisons of our business performance across periods.

    Employer payroll taxes related to stock-based compensation resulting from our IPO
    We exclude employer payroll taxes related to the time-based vesting and net settlement of restricted stock units in connection with our initial public offering (the “IPO”), because this does not correlate to the operation of our business. We believe that excluding this item provides meaningful supplemental information regarding operational performance given the amount of employer payroll tax-related items on employee stock transactions was immaterial prior to our IPO.

    Income tax effect
    This represents the impact of the non-GAAP adjustments on an after-tax basis and one-off discrete tax adjustments that are unrelated to our core operating performance in connection with the presentation of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share. This approach is designed to enhance investors’ ability to understand the impact of our non-GAAP tax expense on our current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments.

    Non-GAAP pro forma weighted-average shares to compute non-GAAP pro forma net income (loss) per share
    We present non-GAAP pro forma weighted-average shares, assuming our redeemable convertible preferred stock is converted from the beginning of each respective periods presented, to provide meaningful supplemental information regarding EPS trend on a consistent basis. All of our outstanding redeemable preferred stock converted into the equivalent number of shares of common stock in connection with our IPO.

    Cautionary Note Regarding Forward-Looking Statements
    This press release contains forward-looking statements based on Astera Labs’ current expectations. The words “believe”, “estimate”, “expect”, “intend”, “may”, “anticipate”, “plan”, “project”, “will”, and similar phrases as they relate to Astera Labs are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Astera Labs and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements include but are not limited to, statements regarding our future operating results, financial position and guidance, including for the first quarter of fiscal 2025, our business strategy and plans, our objectives for future operations, our development or delivery of new or enhanced products and anticipated results of those products for our customers, our competitive positioning, including to meet the connectivity market opportunity in the future and initiative to advance UALink technology, technological capabilities and plans, our plans to add R&D talent and strategic IP blocks, and macroeconomic trends in cloud and AI infrastructure. A variety of risks and factors that are beyond our control could cause actual results to differ materially from those in the forward-looking statements including, without limitation: the competitive and cyclical nature of the semiconductor industry; the concentration of our customer base; the changes in demand for AI; the macroeconomic environment; risks that demand and the supply chain may be adversely affected, including by the imposition of tariffs by the United States and any corresponding retaliatory tariffs, changes in political policies, military conflict (such as between Russia/Ukraine and Israel/Hamas), terrorism, sanctions or other geopolitical events globally (including conflict between Taiwan and China); quarterly fluctuations in revenues and operating results; difficulties developing new products that achieve market acceptance; risks associated with managing international activities (including trade barriers, particularly with respect to China); absence of long-term commitments from customers; risks that Astera Labs may not be able to manage strains associated with its growth; credit risks associated with its accounts receivable; stock price volatility; information technology risks, including cyber-attacks against Astera Labs’ products and its networks; and other risks and uncertainties that are detailed under the caption “Risk Factors” and elsewhere in our Annual Report on 10-K that will be filed with the Securities and Exchange Commission (the “SEC”) and in Quarterly Reports on Form 10-Q filed with the SEC and the other SEC filings and reports Astera Labs may make from time to time.  Moreover, we operate in a very competitive and rapidly changing environment, and new risks may emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor(s) may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Accordingly, you should not rely on any of the forward-looking statements. Astera Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

    About Astera Labs
    Our PCIe, CXL and Ethernet semiconductor-based connectivity solutions are purpose-built to unleash the full potential of accelerated computing at cloud-scale. Inspired by trusted partnerships with hyperscalers and the data center ecosystem, we are an innovation leader of products that are customizable, interoperable, and reliable. Discover how we are transforming AI and modern data-driven applications at www.asteralabs.com.

     
    ASTERA LABS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
    (In thousands)
     
        December 31,
    2024    		   December 31,
    2023
    Assets        
    Current assets        
    Cash and cash equivalents   $ 79,551     $ 45,098  
    Marketable securities     834,750       104,215  
    Accounts receivable, net     38,811       8,335  
    Inventory     43,215       24,095  
    Prepaid expenses and other current assets     16,652       4,064  
    Total current assets     1,012,979       185,807  
    Property and equipment, net     35,651       4,712  
    Other assets     5,878       5,773  
    Total assets   $ 1,054,508     $ 196,292  
             
    Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
    Current liabilities        
    Accounts payable   $ 26,918     $ 6,337  
    Accrued expenses and other current liabilities     59,624       28,742  
    Total current liabilities     86,542       35,079  
    Other liabilities     3,167       3,787  
    Total liabilities     89,709       38,866  
    Commitments and contingencies        
    Redeemable convertible preferred stock     –       255,127  
    Stockholders’ equity (deficit)        
    Common stock     16       4  
    Additional paid-in capital     1,173,153       27,411  
    Accumulated other comprehensive income     426       259  
    Accumulated deficit     (208,796 )     (125,375 )
    Total stockholders’ equity (deficit)     964,799       (97,701 )
    Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)   $ 1,054,508     $ 196,292  
     
    ASTERA LABS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
    (In thousands, except per share amounts)
     
        Three Months Ended   Years Ended
        December 31,
    2024    		   September 30,
    2024    		   December 31,
    2023    		   December 31,
    2024    		   December 31,
    2023
    Revenue   $ 141,096     $ 113,086     $ 50,514     $ 396,290     $ 115,794  
    Cost of revenue     36,648       25,209       11,489       93,591       35,967  
    Gross profit     104,448       87,877       39,025       302,699       79,827  
                         
    Operating expenses                    
    Research and development     56,524       50,659       19,654       200,830       73,407  
    Sales and marketing     22,818       23,248       4,995       123,652       19,992  
    General and administrative     24,962       22,866       5,356       94,283       15,925  
    Total operating expenses     104,304       96,773       30,005       418,765       109,324  
    Operating income (loss)     144       (8,896 )     9,020       (116,066 )     (29,497 )
    Interest income     10,558       10,912       1,674       34,288       6,549  
    Income (loss) before income taxes     10,702       2,016       10,694       (81,778 )     (22,948 )
    Income tax (benefit) provision     (14,011 )     9,609       (3,631 )     1,643       3,309  
    Net income (loss)   $ 24,713     $ (7,593 )   $ 14,325     $ (83,421 )   $ (26,257 )
                         
    Net income (loss) per share attributable to common stockholders:        
    Basic   $ 0.15     $ (0.05 )   $ —     $ (0.64 )   $ (0.71 )
    Diluted   $ 0.14     $ (0.05 )   $ —     $ (0.64 )   $ (0.71 )
    Weighted-average shares used in calculating net income (loss) per share attributable to common stockholders:                    
    Basic     159,895       156,831       38,627       131,262       37,131  
    Diluted     177,559       156,831       47,636       131,262       37,131  
     
    ASTERA LABS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
    (In thousands)
     
        Years Ended December 31,
          2024       2023  
    Cash flows from operating activities        
    Net loss   $ (83,421 )   $ (26,257 )
    Adjustments to reconcile net loss to net cash provided by (used in) operating activities        
    Stock-based compensation     234,588       10,679  
    Depreciation     3,154       1,781  
    Non-cash operating lease expense     2,428       1,232  
    Warrants contra revenue     1,395       805  
    Inventory write-downs     168       10,343  
    Accretion of discounts on marketable securities     (8,341 )     (1,624 )
    Changes in operating assets and liabilities:        
    Accounts receivable, net     (30,480 )     2,386  
    Inventory     (19,287 )     (5,564 )
    Prepaid expenses and other assets     (13,031 )     (720 )
    Accounts payable     20,887       (4,264 )
    Accrued expenses and other liabilities     31,018       (167 )
    Operating lease liability     (2,402 )     (1,346 )
    Net cash provided by (used in) operating activities     136,676       (12,716 )
             
    Cash flows from investing activities        
    Purchases of property and equipment     (34,245 )     (2,761 )
    Purchases of marketable securities     (930,575 )     (126,225 )
    Sales and maturities of marketable securities     208,665       111,214  
    Other investing activities     (1,413 )     —  
    Net cash used in investing activities     (757,568 )     (17,772 )
             
    Cash flows from financing activities        
    Proceeds from issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions     672,198       —  
    Payment of deferred offering costs     (4,801 )     (1,407 )
    Proceeds from exercises of stock options     5,458       1,115  
    Proceeds from employee stock purchase plan     4,160       —  
    Tax withholding related to net share settlements of restricted stock units     (20,111 )     —  
    Repurchase of common stock upon termination     (1,066 )     (210 )
    Net cash provided by (used in) financing activities     655,838       (502 )
    Net increase (decrease) in cash, cash equivalents, and restricted cash     34,946       (30,990 )
    Cash, cash equivalents, and restricted cash        
    Beginning of the period     45,098       76,088  
    End of the period   $ 80,044     $ 45,098  
     
    ASTERA LABS, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
    (In thousands, except percentages and per share amounts)
     
        Three Months Ended   Years Ended
        December 31,
    2024    		   September 30,
    2024    		   December 31,
    2023    		   December 31,
    2024    		   December 31,
    2023
    GAAP gross profit   $ 104,448     $ 87,877     $ 39,025     $ 302,699     $ 79,827  
    Stock-based compensation expense upon IPO (1)     —       —       —       516       —  
    Stock-based compensation expense     131       102       8       329       24  
    Non-GAAP gross profit   $ 104,579     $ 87,979     $ 39,033     $ 303,544     $ 79,851  
                         
    GAAP gross margin     74.0 %     77.7 %     77.3 %     76.4 %     68.9 %
    Stock-based compensation expense upon IPO (1)     —       —       —       0.1       —  
    Stock-based compensation expense     0.1       0.1       —       0.1       0.1  
    Non-GAAP gross margin     74.1 %     77.8 %     77.3 %     76.6 %     69.0 %
                         
    GAAP operating income (loss)   $ 144     $ (8,896 )   $ 9,020     $ (116,066 )   $ (29,497 )
    Stock-based compensation expense upon IPO (1)     —       —       —       88,873       —  
    Stock-based compensation expense     48,218       45,535       3,299       145,715       10,679  
    Employer payroll tax related to stock-based compensation from IPO (2)     —       —       —       1,072       —  
    Non-GAAP operating income (loss)   $ 48,362     $ 36,639     $ 12,319     $ 119,594     $ (18,818 )
                         
    GAAP operating margin     0.1 %   (7.9)%     17.9 %   (29.3)%   (25.5)%
    Stock-based compensation expense upon IPO (1)     —       —       —       22.4       —  
    Stock-based compensation expense     34.2       40.3       6.5       36.8       9.2  
    Employer payroll tax related to stock-based compensation from IPO (2)     —       —       —       0.3       —  
    Non-GAAP operating margin     34.3 %     32.4 %     24.4 %     30.2 %   (16.3)%
                         
    GAAP net income (loss)   $ 24,713     $ (7,593 )   $ 14,325     $ (83,421 )   $ (26,257 )
    Stock-based compensation expense upon IPO (1)     —       —       —       88,873       —  
    Stock-based compensation expense     48,218       45,535       3,299       145,715       10,679  
    Employer payroll tax related to stock-based compensation from IPO (2)     —       —       —       1,072       —  
    Income tax effect (3)     (6,439 )     2,340       —       (8,910 )     —  
    Non-GAAP net income (loss)   $ 66,492     $ 40,282     $ 17,624     $ 143,329     $ (15,578 )
                         
    Net income (loss) per share attributable to common stockholders:        
    GAAP – basic   $ 0.15     $ (0.05 )   $ —     $ (0.64 )   $ (0.71 )
    GAAP – diluted   $ 0.14     $ (0.05 )   $ —     $ (0.64 )   $ (0.71 )
    Non-GAAP pro forma – diluted   $ 0.37     $ 0.23     $ 0.12     $ 0.84     $ (0.12 )
                         
    Weighted average shares used to compute net income (loss) per share attributable to common stockholders:        
    GAAP – basic     159,895       156,831       38,627       131,262       37,131  
    GAAP – diluted     177,559       156,831       47,636       131,262       37,131  
    Non-GAAP pro forma – diluted (4)     177,559       173,832       138,527       168,913       128,022  

    ____________________

    (1) Stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.

    (2) Employer payroll taxes related to the time-based vesting and settlement of RSUs, that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.

    (3) Income tax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of stock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance. For the three months ended December 31, 2024 and September 30, 2024, the non-GAAP tax benefit rate was 13% and tax expense rate of 15%, respectively. The adjustments for the three months ended December 31, 2023 were not material. For the years ended December 31, 2024, the non-GAAP tax expense rate was 7% compared to a tax benefit rate of 27% for the year ended December 31, 2023.

    (4) We present the non-GAAP pro forma weighted average shares to provide meaningful supplemental information of comparable shares for each periods presented. The non-GAAP pro forma weighted average shares is calculated as follows:

        Three Months Ended   Years Ended
        December 31,
    2024    		   September 30,
    2024    		   December 31,
    2023    		   December 31,
    2024    		   December 31,
    2023
    Shares used to compute GAAP net income (loss) per share attributable to common stockholders – diluted   177,559   156,831   47,636   131,262   37,131
    Weighted average effect of the assumed conversion of redeemable convertible preferred stock from the beginning of the periods   —   —   90,891   19,165   90,891
    Effect of dilutive equivalent shares   —   17,001   —   18,486   —
    Shares used to compute non-GAAP pro forma net income (loss) per share- diluted   177,559   173,832   138,527   168,913   128,022

      

     
    ASTERA LABS, INC.SUPPLEMENTAL FINANCIAL INFORMATIONSTOCK-BASED COMPENSATION EXPENSE (Unaudited)
    (In thousands)
     
      Three Months Ended   Years Ended
      December 31,
    2024    		   September 30,
    2024    		   December 31,
    2023    		   December 31,
    2024    		   December 31,
    2023
    Cost of revenue $ 131   $ 102   $ 8   $ 845   $ 24
    Research and development   18,808     14,641     2,303     76,427     7,360
    Sales and marketing   14,671     16,200     681     95,887     2,067
    General and administrative   14,608     14,592     307     61,429     1,228
    Total stock-based compensation expense (1) $ 48,218   $ 45,535   $ 3,299   $ 234,588   $ 10,679

    ____________________

    (1) Stock-based compensation expense recognized during the year ended December 31, 2024 included $88.9 million of cumulative stock-based compensation expense related to the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.


    IR CONTACT:     Leslie Green
    leslie.green@asteralabs.com

    The MIL Network –

  • MIL-OSI: PennantPark Floating Rate Capital Ltd. Announces Financial Results for the First Quarter Ended December 31, 2024

    Source: GlobeNewswire (MIL-OSI)

    MIAMI, Feb. 10, 2025 (GLOBE NEWSWIRE) — PennantPark Floating Rate Capital Ltd. (NYSE: PFLT) announced today its financial results for the first quarter ended December 31, 2024.

    HIGHLIGHTS
    Quarter ended December 31, 2024 (Unaudited)
    ($ in millions, except per share amounts)

    Assets and Liabilities:      
    Investment portfolio (1)   $ 2,193.9  
    Net assets   $ 962.7  
    GAAP net asset value per share   $ 11.34  
    Quarterly increase in GAAP net asset value per share     0.3 %
    Adjusted net asset value per share (2)   $ 11.34  
    Quarterly increase in adjusted net asset value per share (2)     0.3 %
           
    Credit Facility   $ 608.8  
    2036 Asset-Backed Debt   $ 284.2  
    2036-R Asset Backed Debt   $ 265.3  
    2026 Notes   $ 184.0  
    Regulatory debt to equity   1.40x  
    Weighted average yield on debt investments at quarter-end     10.6 %
           
    Operating Results:      
    Net investment income   $ 30.0  
    Net investment income per share (GAAP)   $ 0.37  
    Core net investment income per share (3)   $ 0.33  
    Distributions declared per share   $ 0.31  
           
    Portfolio Activity:      
    Purchases of investments   $ 606.9  
    Sales and repayments of investments   $ 401.3  
           
    PSSL Portfolio data:      
    PSSL investment portfolio   $ 1,046.2  
    Purchases of investments   $ 224.9  
    Sales and repayments of investments   $ 86.6  
             
    1. Includes investments in PennantPark Senior Secured Loan Fund I LLC, or PSSL, an unconsolidated joint venture, totaling $286.6 million, at fair value.
    2. This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance excluding the impact of the unrealized amounts on the Credit Facility. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
    3. Core net investment income (“Core NII”) is a non-GAAP financial measure. The Company believes that Core NII provides useful information to investors and management because it reflects the Company’s financial performance excluding one-time or non-recurring investment income and expenses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the quarter ended December 31, 2024, Core NII excluded:  i) $3.8m of accelerated amortization income from the early repayment of a loan and ii) $0.8m of incentive fee expense.

    CONFERENCE CALL AT 9:00 A.M. ET ON FEBRUARY 11, 2025

    The Company will also host a conference call at 9:00 a.m. (Eastern Time) on Tuesday February 11, 2025 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing toll-free (888) 394-8218 approximately 5-10 minutes prior to the call. International callers should dial (929) 477-0402. All callers should reference conference ID #1777320 or PennantPark Floating Rate Capital Ltd. An archived replay will also be available on a webcast link located on the Quarterly Earnings page in the Investor section of PennantPark’s website.

    PORTFOLIO AND INVESTMENT ACTIVITY

    “We are pleased to have another quarter of solid performance from both an NAV and net investment income perspective. We are actively investing in this excellent vintage of new core middle market loans,” said Art Penn, Chairman and CEO. “Through the growing balance sheets of PFLT and our PSSL joint venture, we are driving meaningfully increased income.”

    As of December 31, 2024, our portfolio totaled $2,193.9 million, and consisted of $1,963.8 million of first lien secured debt (including $237.7 million in PSSL), $3.4 million of  subordinated debt and $226.7 million of preferred and common equity (including $48.9 million in PSSL). Our debt portfolio consisted of approximately 100% variable-rate investments. As of December 31, 2024, we had two portfolio companies on non-accrual, representing 0.4% and 0.1% of our overall portfolio on a cost and fair value basis, respectively. As of December 31, 2024, the portfolio had net unrealized depreciation of $40.4 million. Our overall portfolio consisted of 159 companies with an average investment size of $13.8 million and had a weighted average yield on debt investments of 10.6%.

    As of September 30, 2024, our portfolio totaled $1,983.5 million and consisted of $1,746.7 million of first lien secured debt (including $237.7 million in PSSL), $2.7 million of second lien secured debt and subordinated debt and $234.1 million of preferred and common equity (including $56.5 million in PSSL). Our debt portfolio consisted of approximately 100% variable-rate investments. As of September 30, 2024, we had two portfolio companies on non-accrual, representing 0.4% and 0.2% of our overall portfolio on a cost and fair value basis, respectively. As of September 30, 2024, the portfolio had net unrealized depreciation of $11.4 million. Our overall portfolio consisted of 158 companies with an average investment size of $12.6 million, and a weighted average yield on debt investments of 11.5%.

    For the three months ended December 31, 2024, we invested $606.9 million in 11 new and 58 existing portfolio companies at a weighted average yield on debt investments of 10.3%. Sales and repayments of investments for the same period totaled $401.3 million including $187.7 million of sales to PSSL. For the three months ended December 31, 2023, we invested $302.6 million in 13 new and 34 existing portfolio companies with a weighted average yield on debt investments of 11.9%. Sales and repayments of investments for the same period totaled $103.8 million, including $62.7 million of sales to PSSL.

    PennantPark Senior Secured Loan Fund I LLC

    The Company and its joint venture partner jointly agreed to invest an additional $100 million of capital in PSSL. In conjunction with increased leverage capacity at PSSL, the $100 million investment will expand the joint venture’s total investment capacity to $1.5 billion, representing a nearly $500 million increase.

    As of December 31, 2024, PSSL’s portfolio totaled $1,046.2 million, consisted of 118 companies with an average investment size of $8.9 million and had a weighted average yield on debt investments of 10.8%. As of September 30, 2024, PSSL’s portfolio totaled $913.3 million, consisted of 109 companies with an average investment size of $8.4 million and had a weighted average yield on debt investments of 11.4%.

    For the three months ended December 31, 2024, PSSL invested $224.9 million (including $187.7 million purchase from the Company) in 17 new and eight existing portfolio companies with a weighted average yield on debt investments of 10.3%. PSSL’s sales and repayments of investments for the same period totaled $86.6 million. For the three months ended December 31, 2023, PSSL invested $75.7 million (including $62.7 million purchased from the Company) in four new and nine existing portfolio companies with a weighted average yield on debt investments of 12.3%. PSSL’s sales and repayments of investments for the same period totaled $27.7 million.

    RESULTS OF OPERATIONS

    Set forth below are the results of operations for the three months ended December 31, 2024 and 2023.

    Investment Income

    For the three months ended December 31, 2024 investment income was $67.0 million, which was attributable to $61.0 million from first lien secured debt and $6.0 million from other investments. For the three months ended December 31, 2023, investment income was $38.0 million, which was attributable to $33.2 million from first lien secured debt and $4.8 million from other investments. The increase in investment income was primarily due to the increase in the size of the debt portfolio.

    Expenses

    For the three months ended December 31, 2024, expenses totaled $37.0 million and were comprised of: $22.4 million of debt related interest and expenses, $5.3 million of base management fees, $7.5 million of performance-based incentive fees, $1.7 million of general and administrative expenses and $0.2 million of taxes. For the three months ended December 31, 2023, expenses totaled $18.5 million and were comprised of: $8.9 million of debt related interest and expenses, $3.0 million of base management fees, $4.9 million of performance-based incentive fees, $1.6 million of general and administrative expenses and $0.2 million of taxes. The increase in expenses was primarily due to the increase in interest expense from increased borrowings and an increase in base management fees and incentive fee  as a result of the increase in our investment portfolio.

    Net Investment Income

    For the three months ended December 31, 2024 and 2023, net investment income totaled $30.0 million or $0.37 per share, and $19.4 million or $0.33 per share, respectively. The increase in net investment income was primarily due to an increase in investment income partially offset by an increase in expenses.

    Net Realized Gains or Losses

    For the three months ended December 31, 2024 and 2023, net realized gains (losses) totaled $26.7 million and $(3.1) million, respectively. The change in net realized gains (losses) was primarily due to changes in the market conditions of our investments and the values at which they were realized.

    Unrealized Appreciation or Depreciation on Investments and Debt

    For the three months ended December 31, 2024 and 2023, we reported net change in unrealized appreciation (depreciation) on investments of $(29.0) million and $6.2 million, respectively. As of December 31, 2024 and September 30, 2024, our net unrealized appreciation (depreciation) on investments totaled $(40.4) million and $(11.4) million, respectively. The net change in unrealized appreciation (depreciation) on our investments was primarily due to the operating performance of the portfolio companies within our portfolio and changes in the capital market conditions of our investments and realization of investments.

    For the three months ended December 31, 2024 and 2023, our Credit Facility had a net change in unrealized appreciation (depreciation) of $0.1 million and of less than ($0.1) million, respectively. As of December 31, 2024 and September 30, 2024, the net unrealized appreciation (depreciation) on the Credit Facility totaled approximately $0.1 million and zero, respectively.  The net change in net unrealized (appreciation) or depreciation was primarily due to changes in the capital markets.

    Net Change in Net Assets Resulting from Operations

    For the three months ended December 31, 2024 and 2023, net increase (decrease) in net assets resulting from operations totaled $28.3 million or $0.35 per share and $22.5 million, or $0.38 per share, respectively. The net increase or (decrease) from operations  was primarily due to operating performance of our portfolio and changes in capital market conditions of our investments along with change in size and cost yield of our debt portfolio and costs of financing.

    LIQUIDITY AND CAPITAL RESOURCES

    Our liquidity and capital resources are derived primarily from cash flows from operations, including income earned, proceeds from investment sales and repayments, and proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations.

    The multi-currency Credit Facility with affiliates of Truist Bank, or the Lenders, was upsized during the quarter to $736 million (increased from $636 million in December 2024).

    For the three months ended December 31, 2024 and 2023, the annualized weighted average cost of debt, inclusive of the fee on the undrawn commitment on the Credit Facility, amendment costs and debt issuance costs, was 7.0% and 6.8%, respectively. As of December 31, 2024 and September 30, 2024, we had $127.1 million and $192.1 million of unused borrowing capacity under the Credit Facility, respectively, subject to leverage and borrowing base restrictions.

    As of December 31, 2024 and September 30, 2024, we had cash equivalents of $102.3 million and $112.1 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to take advantage of market opportunities.

    For the three months ended December 31, 2024, our operating activities used cash of $232.7 million and our financing activities provided cash of $222.9 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily from proceeds from the ATM program and borrowings under the Credit Facility.

    For the three months ended December 31, 2023, our operating activities used cash of $181.9 million and our financing activities provided cash of $157.2 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily due to borrowings under the Credit Facility partially offset by the repayment of the 2023 Notes.

    DISTRIBUTIONS

    During the three months ended December 31, 2024 we declared distributions of $0.3075 per share for total distributions of $25.2 million. During the three months ended December 31, 2023, we declared distributions of $0.3075 per share for total distributions of $18.1 million. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.

    RECENT DEVELOPMENTS

    In February 2025, the Company priced a new securitization financing that is expected to close by early March. The new financing is a $361 million term debt securitization transaction with a weighted average spread of 1.59%, a four-year reinvestment period and a 12-year final maturity.  The weighted average spread of 1.59% is a decrease of 30 basis points from an existing securitization financing that we refinanced in July 2024.

    Securitization financing continues to be a good match for our lower risk first lien assets.  We believe securitizations are attractive financing structures as they have a 12 year stated maturity and generally have 4 to 5 year reinvestment periods. The securitization financings are governed by an indenture similar to other bond instruments which prescribes how the securitization deals with credit deterioration, which means there is no risk of unpredictable behavior from the counterparties.  In addition, securitizations are non mark to market financings regardless of broader market volatility. The only time an asset gets marked to market would be if there are defaults or if we experience CCC downgrades that would cause an excess CCC concentration, whereby only the excess CCC collateral is marked to market.  The securitizations provide an attractive cost of capital that is well matched to the portfolio and provide a downside mitigation tool given the stable and consistent long-term nature of the financing.

    AVAILABLE INFORMATION

    The Company makes available on its website its Quarterly Report on Form 10-Q filed with the SEC, and stockholders may find such report on its website at www.pennantpark.com.

    PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
    (in thousands, except per share data)
     
        December 31, 2024     September 30, 2024  
        (unaudited)        
    Assets            
    Investments at fair value            
    Non-controlled, non-affiliated investments (amortized cost— $1,894,793 and  $1,622,669, respectively)   $ 1,907,349     $ 1,632,269  
    Controlled, affiliated investments (amortized cost— $339,500 and  $372,271, respectively)     286,561       351,235  
    Total investments (amortized cost— $2,234,293 and $1,994,940, respectively)     2,193,910       1,983,504  
    Cash and cash equivalents (cost— $102,273 and $112,046, respectively)     102,262       112,050  
    Interest receivable     13,024       12,167  
    Receivables from investments sold     29,090       —  
    Distributions receivable     577       635  
    Due from affiliate     312       291  
    Prepaid expenses and other assets     5,026       198  
    Total assets     2,344,201       2,108,845  
    Liabilities            
    Credit Facility payable, at fair value (cost— $608,855 and $443,855, respectively)     608,791       443,880  
    2026 Notes payable, net (par—$185,000)     184,026       183,832  
    2036 Asset-Backed Debt, net (par—$287,000)     284,222       284,086  
    2036-R Asset-Backed Debt, net (par-$266,000)     265,268       265,235  
    Payable for investments purchased     471       20,363  
    Interest payable on debt     13,318       14,645  
    Distributions payable     8,698       7,834  
    Base management fee payable     5,264       4,588  
    Incentive fee payable     7,492       3,189  
    Accounts payable and accrued expenses     2,920       2,187  
    Deferred tax liability     1,080       1,712  
    Total liabilities     1,381,550       1,231,551  
    Net assets            
    Common stock, 84,855,896 and 77,579,896 shares issued and outstanding, respectively
       Par value $0.001 per share and 200,000,000 shares authorized    		     85       78  
    Paid-in capital in excess of par value     1,058,949       976,744  
    Accumulated deficit     (96,383 )     (99,528 )
    Total net assets   $ 962,651     $ 877,294  
    Total liabilities and net assets   $ 2,344,201     $ 2,108,845  
    Net asset value per share   $ 11.34     $ 11.31  
     
    PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except per share data)
    (Unaudited)
     
        Three Months Ended December 31,  
        2024     2023  
    Investment income:            
    From non-controlled, non-affiliated investments:            
    Interest   $ 47,463     $ 23,768  
    Dividend     577       508  
    Other income     1,480       1,763  
    From controlled, affiliated investments:            
    Interest     12,808       8,434  
    Dividend     4,375       3,500  
    Other income     306       —  
    Total investment income     67,009       37,973  
    Expenses:            
    Interest and expenses on debt     22,361       8,942  
    Performance-based incentive fee     7,492       4,863  
    Base management fee     5,264       2,951  
    General and administrative expenses     1,200       988  
    Administrative services expenses     500       626  
    Expenses before provision for taxes and financing costs     36,817       18,370  
    Provision for taxes on net investment income     225       154  
    Total expenses     37,042       18,524  
    Net investment income     29,967       19,449  
    Realized and unrealized gain (loss) on investments and debt:            
    Net realized gain (loss) on:            
    Non-controlled, non-affiliated investments     1,181       (3,089 )
    Non-controlled and controlled, affiliated investments     25,493       —  
    Provision for taxes on realized gain on investments     (73 )     —  
    Net realized gain (loss) on investments     26,601       (3,089 )
    Net change in unrealized appreciation (depreciation) on:            
    Non-controlled, non-affiliated investments     2,943       5,228  
    Controlled and non-controlled, affiliated investments     (31,904 )     943  
    Provision for taxes on unrealized appreciation (depreciation) on investments     632       —  
    Debt appreciation (depreciation)     90       (62 )
    Net change in unrealized appreciation (depreciation) on investments and debt     (28,239 )     6,109  
    Net realized and unrealized gain (loss) from investments and debt     (1,638 )     3,020  
    Net increase (decrease) in net assets resulting from operations   $ 28,329     $ 22,469  
    Net increase (decrease) in net assets resulting from operations per common share   $ 0.35     $ 0.38  
    Net investment income per common share   $ 0.37     $ 0.33  
     

    ABOUT PENNANTPARK FLOATING RATE CAPITAL LTD.

    PennantPark Floating Rate Capital Ltd. is a business development company which primarily invests in U.S. middle-market companies in the form of floating rate senior secured loans, including first lien secured debt, second lien secured debt and subordinated debt. From time to time, the Company may also invest in equity investments. PennantPark Floating Rate Capital Ltd. is managed by PennantPark Investment Advisers, LLC.

    ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC

    PennantPark Investment Advisers, LLC is a leading middle-market credit platform, managing $9.4 billion of investable capital, including potential leverage. Since its inception in 2007, PennantPark Investment Advisers, LLC has provided investors access to middle-market credit by offering private equity firms and their portfolio companies as well as other middle-market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark Investment Advisers, LLC is headquartered in Miami   and has offices in New York, Chicago, Houston, Los Angeles, and Amsterdam.

    FORWARD-LOOKING STATEMENTS AND OTHER

    This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results, and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. PennantPark Floating Rate Capital Ltd. undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.

    We may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.

    The information contained herein is based on current tax laws, which may change in the future. The Company cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in this material does not constitute any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice.

    CONTACT: Richard T. Allorto, Jr.
      PennantPark Floating Rate Capital Ltd.
      (212) 905-1000
      www.pennantpark.com

    The MIL Network –

  • MIL-OSI: SPS Commerce Reports Fourth Quarter and Fiscal Year 2024 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    Company delivers 96th consecutive quarter of topline growth

    Fourth quarter 2024 revenue grew 18% and recurring revenue grew 19% from the fourth quarter of 2023

    MINNEAPOLIS, Feb. 10, 2025 (GLOBE NEWSWIRE) — SPS Commerce, Inc. (NASDAQ: SPSC), a leader in retail supply chain cloud services, today announced financial results for the fourth quarter and year ended December 31, 2024.

    Financial Highlights

    Fourth Quarter 2024 Financial Highlights

    • Revenue was $170.9 million in the fourth quarter of 2024, compared to $145.0 million in the fourth quarter of 2023, reflecting 18% growth.
    • Recurring revenue grew 19% from the fourth quarter of 2023.
    • Net income was $17.6 million or $0.46 per diluted share, compared to net income of $19.0 million or $0.51 per diluted share in the fourth quarter of 2023.
    • Non-GAAP income per diluted share was $0.89, compared to non-GAAP income per diluted share of $0.75 in the fourth quarter of 2023.
    • Adjusted EBITDA for the fourth quarter of 2024 increased 18% to $49.6 million compared to the fourth quarter of 2023.

    Fiscal Year 2024 Financial Highlights

    • Revenue was $637.8 million for the year ended December 31, 2024, compared to $536.9 million for the year ended December 31, 2023, reflecting 19% growth.
    • Recurring revenue grew 20% from the year ended December 31, 2023.
    • Net income was $77.1 million or $2.04 per diluted share for the year ended December 31, 2024, compared to net income of $65.8 million or $1.76 per diluted share for the comparable period in 2023, reflecting 17% growth in year-over-year net income.
    • Non-GAAP income per diluted share was $3.48, compared to non-GAAP income per diluted share of $2.85 in the year ended December 31, 2023.
    • Adjusted EBITDA for the year ended December 31, 2024 increased 18% to $186.6 million compared to the year ended December 31, 2023.

    “We are pleased with what we have accomplished in 2024, and I would like to congratulate SPS Commerce employees for their unwavering commitment to excellence and exceptional understanding of the retail supply chain,” said Chad Collins, CEO of SPS Commerce. “With the depth and breadth of solutions we offer today, we are uniquely positioned to support all trading relationships and continue growing our network to move the world of commerce forward.”

    “We believe that SPS’ leading retail network and competitive product portfolio position us well to continue on our profitable growth trajectory,” said Kim Nelson, CFO of SPS Commerce.

    Guidance*

    First Quarter 2025 Guidance

    • Revenue is expected to be in the range of $178.5 million to $180.0 million, representing 19% to 20% year-over-year growth.
    • Net income per diluted share is expected to be in the range of $0.39 to $0.41, with fully diluted weighted average shares outstanding of 38.7 million shares.
    • Non-GAAP income per diluted share is expected to be in the range of $0.82 to $0.84.
    • Adjusted EBITDA is expected to be in the range of $49.5 million to $50.5 million.
    • Non-cash, share-based compensation expense is expected to be $15.0 million, depreciation expense is expected to be $5.4 million, and amortization expense is expected to be $9.2 million.

    Fiscal Year 2025 Guidance

    • Revenue is expected to be in the range of $758.0 million to $763.0 million, representing 19% to 20% growth over 2024.
    • Net income per diluted share is expected to be in the range of $1.93 to $1.99, with fully diluted weighted average shares outstanding of 38.9 million shares.
    • Non-GAAP income per diluted share is expected to be in the range of $3.78 to $3.84.
    • Adjusted EBITDA is expected to be in the range of $227.5 million to $231.0 million, representing 22% to 24% growth over 2024.
    • Non-cash, share-based compensation expense is expected to be $63.0 million, depreciation expense is expected to be $23.5 million, and amortization expense is expected to be $39.8 million.

    *Inclusive of the expected results of the Carbon6 acquisition

    The forward-looking measures and the underlying assumptions involve significant known and unknown risks and uncertainties, and actual results may vary materially. The Company does not present a reconciliation of the forward-looking non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, and non-GAAP income per share, to the most directly comparable GAAP financial measures because it is impractical to forecast certain items without unreasonable efforts due to the uncertainty and inherent difficulty of predicting, within a reasonable range, the occurrence and financial impact of and the periods in which such items may be recognized.

    Quarterly Conference Call

    To access the call, please dial 1-833-816-1382, or outside the U.S. 1-412-317-0475 at least 15 minutes prior to the 3:30 p.m. CT start time. Please ask to join the SPS Commerce Q4 2024 conference call. A live webcast of the call will also be available at http://investors.spscommerce.com under the Events and Presentations menu. The replay will also be available on our website at http://investors.spscommerce.com.

    About SPS Commerce

    SPS Commerce is the world’s leading retail network, connecting trading partners around the globe to optimize supply chain operations for all retail partners. We support data-driven partnerships with innovative cloud technology, customer-obsessed service, and accessible experts so our customers can focus on what they do best. Over 45,000 recurring revenue customers in retail, grocery, distribution, supply, manufacturing, and logistics are using SPS as their retail network. SPS has achieved 96 consecutive quarters of revenue growth and is headquartered in Minneapolis. For additional information, contact SPS at 866-245-8100 or visit www.spscommerce.com.

    SPS COMMERCE, SPS, SPS logo and INFINITE RETAIL POWER are marks of SPS Commerce, Inc. and registered in the U.S. Patent and Trademark Office, along with other SPS marks. Such marks may also be registered or otherwise protected in other countries. 

    SPS-F

    Use of Non-GAAP Financial Measures

    To supplement our consolidated financial statements, we provide investors with Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP income per share, all of which are non-GAAP financial measures. We believe that these non-GAAP financial measures provide useful information to our management, Board of Directors, and investors regarding certain financial and business trends relating to our financial condition and results of operations.

    Our management uses these non-GAAP financial measures to compare our performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation. We believe these non-GAAP financial measures are useful to an investor as they are widely used in evaluating operating performance. Adjusted EBITDA and Adjusted EBITDA Margin are used to measure operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of capital structure and the method by which assets were acquired.

    These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in our consolidated financial statements and are subject to inherent limitations. Investors should review the reconciliations of non-GAAP financial measures to the comparable GAAP financial measures that are included in this press release.

    Adjusted EBITDA Measures:

    Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain or loss from investments held and foreign currency impact on cash and investments, investment income, and other adjustments as necessary for a fair presentation. Other adjustments for the year ended December 31, 2024 included the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs. Other adjustments for the year ended December 31, 2023 included the expense impacts from disposals of certain capitalized internally developed software and acquisition-related employee severance costs. Net income is the comparable GAAP measure of financial performance.

    Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue. Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.

    Non-GAAP Income Per Share Measure:

    Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain or loss from investments held and foreign currency impact on cash and investments, other adjustments as necessary for a fair presentation, including for the year ended December 31, 2024 the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs, and for the year ended December 31, 2023 the expense impacts from disposals of certain capitalized internally developed software and acquisition-related employee severance costs, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.

    Forward-Looking Statements

    This press release may contain forward-looking statements, including information about management’s view of SPS Commerce’s future expectations, plans and prospects, including our views regarding future execution within our business, the opportunity we see in the retail supply chain world and our performance for the first quarter and full year of 2025, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors which may cause the results of SPS Commerce to be materially different than those expressed or implied in such statements. Certain of these risk factors and others are included in documents SPS Commerce files with the Securities and Exchange Commission, including but not limited to, SPS Commerce’s Annual Report on Form 10-K for the year ended December 31, 2023, as well as subsequent reports filed with the Securities and Exchange Commission. Other unknown or unpredictable factors also could have material adverse effects on SPS Commerce’s future results. The forward-looking statements included in this press release are made only as of the date hereof. SPS Commerce cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, SPS Commerce expressly disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

     
     
    SPS COMMERCE, INC.
    CONSOLIDATED BALANCE SHEETS
    (Unaudited; in thousands, except shares)
     
      December 31,
    2024    		   December 31,
    2023
    ASSETS      
    Current assets      
    Cash and cash equivalents $         241,017     $         219,081  
    Short-term investments           —               56,359  
    Accounts receivable           56,214               50,160  
    Allowance for credit losses           (4,179 )             (3,320 )
    Accounts receivable, net           52,035               46,840  
    Deferred costs           65,342               62,403  
    Other assets           23,513               16,758  
    Total current assets           381,907               401,441  
    Property and equipment, net           37,547               36,043  
    Operating lease right-of-use assets           8,192               7,862  
    Goodwill           399,180               249,176  
    Intangible assets, net           181,294               107,344  
    Other assets      
    Deferred costs, non-current           20,572               20,347  
    Deferred income tax assets           505               505  
    Other assets, non-current           2,033               1,126  
    Total assets $         1,031,230     $         823,844  
    LIABILITIES AND STOCKHOLDERS’ EQUITY      
    Current liabilities      
    Accounts payable $         8,577     $         7,420  
    Accrued compensation           47,160               41,588  
    Accrued expenses           12,108               8,014  
    Deferred revenue           74,256               69,187  
    Operating lease liabilities           4,583               4,460  
    Total current liabilities           146,684               130,669  
    Other liabilities      
    Deferred revenue, non-current           6,189               6,930  
    Operating lease liabilities, non-current           7,885               9,569  
    Deferred income tax liabilities           15,541               8,972  
    Other liabilities, non-current           241               229  
    Total liabilities           176,540               156,369  
    Commitments and contingencies      
    Stockholders’ equity      
    Common stock           40               39  
    Treasury stock           (99,748 )             (128,892 )
    Additional paid-in capital           627,982               537,061  
    Retained earnings           336,099               259,045  
    Accumulated other comprehensive gain (loss)           (9,683 )             222  
    Total stockholders’ equity           854,690               667,475  
    Total liabilities and stockholders’ equity $         1,031,230     $         823,844  
     
    SPS COMMERCE, INC.
    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited; in thousands, except per share amounts)
     
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
        2024       2023       2024       2023  
    Revenues $         170,907     $         144,965     $         637,765     $         536,910  
    Cost of revenues           55,585               49,040               210,714               182,069  
    Gross profit           115,322               95,925               427,051               354,841  
    Operating expenses              
    Sales and marketing           39,220               33,214               148,920               122,936  
    Research and development           17,142               14,216               62,809               53,654  
    General and administrative           26,354               20,612               102,929               84,887  
    Amortization of intangible assets           7,862               4,998               23,510               16,116  
    Total operating expenses           90,578               73,040               338,168               277,593  
    Income from operations           24,744               22,885               88,883               77,248  
    Other income (expense), net           (373 )             3,456               10,593               8,315  
    Income before income taxes           24,371               26,341               99,476               85,563  
    Income tax expense           6,812               7,330               22,422               19,739  
    Net income $         17,559     $         19,011     $         77,054     $         65,824  
                   
    Net income per share              
    Basic $         0.47     $         0.52     $         2.07     $         1.80  
    Diluted $         0.46     $         0.51     $         2.04     $         1.76  
                   
    Weighted average common shares used to compute net income per share              
    Basic           37,646               36,831               37,306               36,646  
    Diluted           38,133               37,640               37,856               37,475  
     
    SPS COMMERCE, INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited; in thousands)
     
      Twelve Months Ended
    December 31,
        2024       2023  
    Cash flows from operating activities      
    Net income $         77,054     $         65,824  
    Reconciliation of net income to net cash provided by operating activities      
    Deferred income taxes           (9,786 )             (10,079 )
    Depreciation and amortization of property and equipment           18,721               18,631  
    Amortization of intangible assets           23,510               16,116  
    Provision for credit losses           7,683               5,707  
    Stock-based compensation           54,557               45,508  
    Other, net           577               2,415  
    Changes in assets and liabilities, net of effects of acquisitions      
    Accounts receivable           (9,653 )             (11,949 )
    Deferred costs           (3,120 )             (10,724 )
    Other assets and liabilities           (7,313 )             1,834  
    Accounts payable           796               (3,947 )
    Accrued compensation           1,434               7,143  
    Accrued expenses           4,115               1,302  
    Deferred revenue           728               6,464  
    Operating leases           (1,905 )             (1,947 )
    Net cash provided by operating activities           157,398               132,298  
    Cash flows from investing activities      
    Purchases of property and equipment           (20,046 )             (19,761 )
    Purchases of investments           (85,759 )             (133,994 )
    Maturities of investments           143,275               131,331  
    Acquisition of businesses, net           (147,924 )             (70,218 )
    Net cash used in investing activities           (110,454 )             (92,642 )
    Cash flows from financing activities      
    Repurchases of common stock           (37,567 )             —  
    Net proceeds from exercise of options to purchase common stock           4,714               9,856  
    Net proceeds from employee stock purchase plan activity           9,827               8,114  
    Payments for contingent consideration           —               (2,000 )
    Net cash provided by (used in) financing activities           (23,026 )             15,970  
    Effect of foreign currency exchange rate changes           (1,982 )             562  
    Net increase in cash and cash equivalents           21,936               56,188  
    Cash and cash equivalents at beginning of period           219,081               162,893  
    Cash and cash equivalents at end of period $         241,017     $         219,081  
     
     
     
    SPS COMMERCE, INC.
    NON-GAAP RECONCILIATIONS
    (Unaudited; in thousands, except Margin, Adjusted EBITDA Margin, and per share amounts)
    Adjusted EBITDA
      Three Months Ended   Twelve Months Ended
    December 31, December 31,
        2024       2023       2024       2023  
    Net income $ 17,559     $ 19,011     $ 77,054     $ 65,824  
    Income tax expense   6,812       7,330       22,422       19,739  
    Depreciation and amortization of property and equipment   4,711       4,667       18,721       18,631  
    Amortization of intangible assets   7,862       4,998       23,510       16,116  
    Stock-based compensation expense   12,293       9,411       54,557       45,508  
    Realized (gain) loss from investments held and foreign currency impact on cash and investments   2,521       (1,201 )     (115 )     (1,726 )
    Investment income   (2,205 )     (2,287 )     (10,582 )     (7,660 )
    Other   86       28       1,064       1,198  
    Adjusted EBITDA $ 49,639     $ 41,957     $ 186,631     $ 157,630  
                   
    Adjusted EBITDA Margin
      Three Months Ended   Twelve Months Ended
    December 31, December 31,
       2024    2023    2024    2023
    Revenue $ 170,907       $ 144,965       $ 637,765       $ 536,910    
                   
    Net income   17,559         19,011         77,054         65,824    
    Margin   10   %     13   %     12   %     12   %
                   
    Adjusted EBITDA   49,639         41,957         186,631         157,630    
    Adjusted EBITDA Margin   29   %     29   %     29   %     29   %
                   
    Non-GAAP Income per Share
      Three Months Ended   Twelve Months Ended
    December 31, December 31,
        2024       2023       2024       2023  
    Net income $ 17,559     $ 19,011     $ 77,054     $ 65,824  
    Stock-based compensation expense   12,293       9,411       54,557       45,508  
    Amortization of intangible assets   7,862       4,998       23,510       16,116  
    Realized (gain) loss from investments held and foreign currency impact on cash and investments   2,521       (1,201 )     (115 )     (1,726 )
    Other   86       28       1,064       1,198  
    Income tax effects of adjustments   (6,371 )     (3,906 )     (24,505 )     (19,983 )
    Non-GAAP income $ 33,950     $ 28,341     $ 131,565     $ 106,937  
                   
    Shares used to compute net income and non-GAAP income per share              
    Basic   37,646       36,831       37,306       36,646  
    Diluted   38,133       37,640       37,856       37,475  
                   
    Net income per share, basic $ 0.47     $ 0.52     $ 2.07     $ 1.80  
    Non-GAAP adjustments to net income per share, basic   0.43       0.25       1.46       1.12  
    Non-GAAP income per share, basic $ 0.90     $ 0.77     $ 3.53     $ 2.92  
                   
    Net income per share, diluted $ 0.46     $ 0.51     $ 2.04     $ 1.76  
    Non-GAAP adjustments to net income per share, diluted   0.43       0.24       1.44       1.09  
    Non-GAAP income per share, diluted $ 0.89     $ 0.75     $ 3.48     $ 2.85  
                   
    The annual per share amounts may not cross-sum due to rounding.
                   

    Contact:
    Investor Relations
    The Blueshirt Group
    Irmina Blaszczyk & Lisa Laukkanen
    SPSC@blueshirtgroup.com
    415-217-4962

    The MIL Network –

  • MIL-OSI: PennantPark Investment Corporation Announces Financial Results for the Quarter Ended December 31, 2024

    Source: GlobeNewswire (MIL-OSI)

    MIAMI, Feb. 10, 2025 (GLOBE NEWSWIRE) — PennantPark Investment Corporation (NYSE: PNNT) announced today its financial results for the first quarter ended December 31, 2024.

    HIGHLIGHTS 
    Quarter ended December 31, 2024 (unaudited)
    ($ in millions, except per share amounts) 

    Assets and Liabilities:          
    Investment portfolio (1)       $ 1,298.1  
    Net assets       $ 494.3  
    GAAP net asset value per share       $ 7.57  
    Quarterly increase in GAAP net asset value per share         0.1 %
    Adjusted net asset value per share (2)       $ 7.57  
    Quarterly increase in adjusted net asset value per share (2)         0.1 %
               
    Credit Facility       $ 460.0  
    2026 Notes       $ 148.8  
    2026-2 Notes       $ 163.3  
    Regulatory debt to equity       1.58x  
    Weighted average yield on debt investments         12.0 %
               
    Operating Results:          
    Net investment income       $ 13.0  
    Net investment income per share       $ 0.20  
    Core net investment income per share (3)       $ 0.20  
    Distributions declared per share       $ 0.24  
               
    Portfolio Activity:          
    Purchases of investments*       $ 295.7  
    Sales and repayments of investments*       $ 353.7  
               
    PSLF Portfolio data:          
    PSLF investment portfolio       $ 1,275.1  
    Purchases of investments       $ 353.8  
    Sales and repayments of investments       $ 109.1  

    ________________________
           * excludes U.S. Government Securities

    1. Includes investments in PennantPark Senior Loan Fund, LLC (“PSLF”), an unconsolidated joint venture, totaling $208.2 million, at fair value.
    2. This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance excluding the impact of unrealized gain on the Company’s multi-currency, senior secured revolving credit facility with Truist Bank, as amended, the “Credit Facility.” The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
    3. Core net investment income (“Core NII”) is a non-GAAP financial measure. The Company believes that Core NII provides useful information to investors and management because it reflects the Company’s financial performance excluding one-time or non-recurring investment income and expenses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the quarter ended December 31, 2024, there were no one-time events, resulting in $0.20 of Core NII..

    CONFERENCE CALL AT 12:00 P.M. EST ON FEBRUARY 11, 2025

    PennantPark Investment Corporation (“we,” “our,” “us” or the “Company”) will also host a conference call at 12:00 p.m. (Eastern Time) on Tuesday, February 11, 2025 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing toll-free (888) 394-8218 approximately 5-10 minutes prior to the call. International callers should dial (646) 828-8193. All callers should reference conference ID #9452525 or PennantPark Investment Corporation. An archived replay will also be available on a webcast link located on the Quarterly Earnings page in the Investor section of PennantPark’s website.

    PORTFOLIO AND INVESTMENT ACTIVITY 

    “We are pleased to announce another quarter of solid NAV and credit performance,” said Arthur Penn, Chairman and CEO.  “Our earnings stream continues to be strong and is driven in part by the  excellent returns generated by our PSLF Joint Venture. Additionally, our dividend stream is supported by substantial spillover income.”

    As of December 31, 2024, our portfolio totaled $1,298.1 million and consisted of $575.0 million or 44% of first lien secured debt, $124.8 million or 10% of U.S. Government Securities, $50.0 million or 4% of second lien secured debt, $206.1 million or 16% of subordinated debt (including $132.2 million or 10% in PSLF) and $342.2 million or 26% of preferred and common equity (including $76.0 million or 6% in PSLF). Our interest bearing debt portfolio consisted of 92% variable-rate investments and 8% fixed-rate investments. As of December 31, 2024, we had two portfolio companies on non-accrual, representing 4.3% and 1.5% percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $13.6 million as of December 31, 2024. Our overall portfolio consisted of 158 companies with an average investment size of $7.4 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 12.0%.

    As of September 30, 2024, our portfolio totaled $1,328.1 million and consisted of $667.9 million or 50% of first lien secured debt, $99.6 million or 8% of U.S. Government Securities, $67.2 million or 5% of second lien secured debt, $181.7 million or 14% of subordinated debt (including $115.9 million or 9% in PSLF) and $311.7 million or 23% of preferred and common equity (including $67.9 million or 5% in PSLF). Our interest bearing debt portfolio consisted of 94% variable-rate investments and 6% fixed-rate investments. As of September 30, 2024, we had two portfolio companies on non-accrual, representing 4.1% and 2.3% percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $11.2 million as of September 30, 2024. Our overall portfolio consisted of 152 companies with an average investment size of $8.1 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 12.3%.

    For the three months ended December 31, 2024, we invested $295.7 million in 12 new and 61 existing portfolio companies with a weighted average yield on debt investments of 10.6% (excluding U.S. Government Securities). For the three months ended December 31, 2024, sales and repayments of investments totaled $353.7 million (excluding U.S. Government Securities).

    For the three months ended December 31, 2023, we invested $231.1 million in 12 new and 32 existing portfolio companies with a weighted average yield on debt investments of 11.9%. For the three months ended December 31, 2023, sales and repayments of investments totaled $71.0 million (excluding U.S. Government Securities).

    PennantPark Senior Loan Fund, LLC

    As of December 31, 2024, PSLF’s portfolio totaled $1,275.1 million, consisted of 112 companies with an average investment size of $11.4 million and had a weighted average yield interest bearing debt investments of 10.7%.

    As of September 30, 2024, PSLF’s portfolio totaled $1,031.2 million, consisted of 102 companies with an average investment size of $10.1 million and had a weighted average yield interest bearing debt investments of 11.3%.

    For the three months ended December 31, 2024, PSLF invested $353.8 million (including $286.6 million was purchased from the Company) in 15 new and 43 existing portfolio companies at weighted average yield interest bearing debt investments of 10.5%. PSLF’s sales and repayments of investments for the same period totaled $109.1 million.

    For the three months ended December 31, 2023, PSLF invested $81.0 million (including $50.8 million were purchased from the Company) in five new and seven existing portfolio companies at weighted average yield on interest bearing debt investments of 12.7%. PSLF’s sales and repayments of investments for the same period totaled $29.1 million.

    RESULTS OF OPERATIONS

    Set forth below are the results of operations during the three months ended December 31, 2024 and 2023.

    Investment Income

    For the three months ended December 31, 2024, investment income was $34.2 million, which was attributable to $25.2 million from first lien secured debt, $2.0 million from second lien secured debt, $1.1 million from subordinated debt and $5.9 million from other investments, respectively. For the three months ended December 31, 2023, investment income was $34.3 million, which was attributable to $25.1 million from first lien secured debt, $2.6 million from second lien secured debt, $1.3 million from subordinated debt and $5.3 million from preferred and common equity, respectively. The decrease in investment income for the three months ended December 31, 2024 was primarily due to the changes in our portfolio and investment yields.

    Expenses

    For the three months ended December 31, 2024, expenses totaled $21.2 million and were comprised of $11.7 million of debt related interest and expenses, $4.3 million of base management fees, $2.8 million of incentive fees, $1.7 million of general and administrative expenses and $0.7 million of provision for excise taxes. For the three months ended December 31, 2023, expenses totaled $18.7 million, and were comprised of; $9.6 million of debt-related interest and expenses, $4.0 million of base management fees, $3.3 million of incentive fees, $1.4 million of general and administrative expenses and $0.4 million of provision for excise taxes. The increase in expenses for the three months ended December 31, 2024 was primarily due an increase in debt related interest and expenses.

    Net Investment Income

    For the three months ended December 31, 2024 and 2023, net investment income totaled $13.0 million, or $0.20 per share and $15.7 million, or $0.24 per share. The decrease in net investment income for the three months ended December 31, 2024 was primarily due to increase in interest expense.

    Net Realized Gains or Losses

    For the three months ended December 31, 2024 and 2023, net realized gains (losses) totaled $(2.6) million and $1.8 million, respectively. The change in realized gains (losses) was primarily due to changes in the market conditions of our investments and the values at which they were realized.

    Unrealized Appreciation or Depreciation on Investments and Debt

    For the three months ended December 31, 2024 and 2023, we reported net change in unrealized appreciation (depreciation) on investments of $2.4 million and $(5.0) million, respectively. As of December 31, 2024 and September 30, 2024, our net unrealized appreciation (depreciation) on investments totaled $13.6 million and $11.2 million, respectively. The net change in unrealized depreciation on our investments was primarily due to changes in the capital market conditions of our investments and the values at which they were realized.

    For the three months ended December 31, 2024 and 2023, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of $3.3 million and $(2.0) million, respectively. As of December 31, 2024 and September 30, 2024, the net unrealized appreciation (depreciation) on the Truist Credit Facility totaled $4.4 million and $1.1 million, respectively. The net change in unrealized depreciation was primarily due to changes in the capital markets.

    Net Change in Net Assets Resulting from Operations

    For the three months ended December 31, 2024 and 2023, net increase (decrease) in net assets resulting from operations totaled $16.1 million or $0.25 per share and $10.7 million or $0.16 per share, respectively. The increase in net assets from operations for the three months ended December 31, 2024 was primarily due to a decrease in the net realized and unrealized depreciation in the portfolio primarily driven by changes in market conditions.

    LIQUIDITY AND CAPITAL RESOURCES

    Our liquidity and capital resources are derived primarily from cash flows from operations, including investment sales and repayments, income earned, proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of interest expense, fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations.

    As of December 31, 2024 and September 30, 2024, we had $464.5 million and $461.5 million, respectively, in outstanding borrowings under the Truist Credit Facility. The Truist Credit Facility had a weighted average interest rate of 6.8% and 7.2%, respectively, exclusive of the fee on undrawn commitments. As of December 31, 2024 and September 30, 2024, we had $10.5 million and $13.5 million of unused borrowing capacity under the Truist Credit Facility, respectively, subject to leverage and borrowing base restrictions.

    As of December 31, 2024 and September 30, 2024, we had cash and cash equivalents of $55.9 million and $49.9 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to allows us to effectively operate our business.

    For the three months ended December 31, 2024, our operating activities provided cash of $18.7 million and our financing activities used cash of $12.7 million. Our operating activities provided cash primarily due to our investment activities and our financing activities used cash primarily for distributions paid to stockholders.

    For the three months ended December 31, 2023, our operating activities used cash of $155.1 million and our financing activities provided cash of $153.2 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily from borrowings under the Truist Credit Facility.

    DISTRIBUTIONS

    During the three months ended December 31, 2024, we declared distributions of $0.24 per share, for total distributions of $15.7 million. During the three months ended December 31, 2023, we declared distributions of $0.21 per share, for total distributions of $13.7 million. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.

    RECENT DEVELOPMENTS

    The multi-currency Truist Credit Facility was upsized to $500.0 million (increased from $475 million in February 2025).

    AVAILABLE INFORMATION

    The Company makes available on its website its Quarterly Report on Form 10-Q filed with the SEC and stockholders may find the report on our website at www.pennantpark.com.

     
    PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
    (In thousands, except share data)
     
        December 31, 2024     September 30, 2024  
        (unaudited)        
    Assets            
    Investments at fair value            
    Non-controlled, non-affiliated investments (amortized cost—$856,406 and $916,168, respectively)   $ 845,829     $ 910,323  
    Non-controlled, affiliated investments (amortized cost—$57,109 and $56,734, respectively)     11,032       33,423  
    Controlled, affiliated investments (amortized cost—$370,967 and $343,970, respectively)     441,205       384,304  
    Total investments (amortized cost—$1,284,482 and $1,316,872, respectively)     1,298,066       1,328,050  
    Cash and cash equivalents (cost—$55,868 and $49,833, respectively)     55,851       49,861  
    Interest receivable     5,227       5,261  
    Receivable for investments sold     47,230       —  
    Distribution receivable     5,359       5,417  
    Due from affiliates     144       228  
    Prepaid expenses and other assets     214       269  
    Total assets     1,412,091       1,389,086  
    Liabilities            
    Truist Credit Facility payable, at fair value (cost—$464,456 and $461,456, respectively)     460,033       460,361  
    2026 Notes payable, net (par— $150,000)     148,796       148,571  
    2026 Notes-2 payable, net (par— $165,000)     163,293       163,080  
    Payable for investment purchased     125,050       100,096  
    Distributions payable     5,224       5,224  
    Base management fee payable     4,268       4,297  
    Incentive fee payable     2,756       3,057  
    Accounts payable and accrued expenses     5,500       4,053  
    Interest payable on debt     2,850       6,406  
    Due to affiliates     —       33  
    Total liabilities     917,770       895,178  
    Net assets            
    Common stock, 65,296,094 and 65,296,094 shares issued and outstanding, respectively
    Par value $0.001 per share and 200,000,000 shares authorized    		     65       65  
    Paid-in capital in excess of par value     743,968       743,968  
    Accumulated deficit     (249,712 )     (250,125 )
    Total net assets   $ 494,321     $ 493,908  
    Total liabilities and net assets   $ 1,412,091     $ 1,389,086  
    Net asset value per share   $ 7.57     $ 7.56  
     
    PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except share data)
    (Unaudited)
     
        Three Months Ended December 31,  
        2024     2023  
    Investment income:            
    From non-controlled, non-affiliated investments:            
    Interest   $ 18,767     $ 21,068  
    Payment-in-kind     1,421       2  
    Dividend income     508       692  
    Other income     582       1,425  
    From non-controlled, affiliated investments:            
    Payment-in-kind     —       347  
    From controlled, affiliated investments:            
    Interest     7,255       5,481  
    Payment-in-kind     823       632  
    Dividend income     4,851       4,689  
    Total investment income     34,207       34,336  
    Expenses:            
    Interest and expenses on debt     11,741       9,557  
    Base management fee     4,268       4,004  
    Incentive fee     2,756       3,321  
    General and administrative expenses     1,250       1,214  
    Administrative services expenses     500       189  
    Expenses before provision for taxes     20,515       18,285  
    Provision for taxes on net investment income     700       393  
    Net expenses     21,215       18,678  
    Net investment income     12,992       15,658  
    Realized and unrealized gain (loss) on investments and debt:            
    Net realized gain (loss) on investments and debt:            
    Non-controlled, non-affiliated investments     (2,560 )     2,581  
    Non-controlled and controlled, affiliated investments     —       (750 )
    Net realized gain (loss) on investments and debt     (2,560 )     1,831  
    Net change in unrealized appreciation (depreciation) on:            
    Non-controlled, non-affiliated investments     (4,777 )     (12,270 )
    Non-controlled and controlled, affiliated investments     7,138       7,324  
    Provision for taxes on unrealized appreciation (depreciation) on investments     (37 )     150  
    Debt appreciation (depreciation)     3,328       (2,040 )
    Net change in unrealized appreciation (depreciation) on investments and debt     5,652       (6,836 )
    Net realized and unrealized gain (loss) from investments and debt     3,092       (5,005 )
    Net increase (decrease) in net assets resulting from operations   $ 16,084     $ 10,653  
    Net increase (decrease) in net assets resulting from operations per common share   $ 0.25     $ 0.16  
    Net investment income per common share   $ 0.20     $ 0.24  

    ABOUT PENNANTPARK INVESTMENT CORPORATION

    PennantPark Investment Corporation, or the Company, is a business development company that invests primarily in U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments. PennantPark Investment Corporation is managed by PennantPark Investment Advisers, LLC.

    ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC

    PennantPark Investment Advisers, LLC is a leading middle market credit platform, managing $9.4 billion of investable capital, including available leverage. Since its inception in 2007, PennantPark Investment Advisers, LLC has provided investors access to middle market credit by offering private equity firms and their portfolio companies as well as other middle-market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark Investment Advisers, LLC is headquartered in Miami and has offices in New York, Chicago, Houston, Los Angeles, and Amsterdam.

    FORWARD-LOOKING STATEMENTS

    This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports PennantPark Investment Corporation files under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the SEC. PennantPark Investment Corporation undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.

    We may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.

    The information contained herein is based on current tax laws, which may change in the future. The Company cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in this material does not constitute any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice.

    Contact: Richard T. Allorto, Jr.
      PennantPark Investment Corporation
      (212) 905-1000
      www.pennantpark.com

    The MIL Network –

  • MIL-OSI: Tower Semiconductor Reports 2024 Fourth Quarter and Full Year Financial Results

    Source: GlobeNewswire (MIL-OSI)

    MIGDAL HAEMEK, Israel, Feb. 10, 2025 (GLOBE NEWSWIRE) — Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reports today its results for the fourth quarter of 2024 and for the year ended December 31, 2024.

    Fourth Quarter of 2024 Results Overview
    Revenues for the fourth quarter of 2024 were $387 million as compared to $371 million for the third quarter of 2024 and $352 million for the fourth quarter of 2023, representing 5% quarter over quarter growth and 10% year over year growth. The Company met its expressed target of sequential quarter over quarter revenue growth within 2024, resulting in 18% growth fourth quarter over first quarter.

    Gross profit for the fourth quarter of 2024 was $87 million, compared to $84 million for the fourth quarter of 2023. During the fourth quarter of 2024, the Company took on for the first time its portion of incremental costs of the greenfield Agrate facility.

    Operating profit for the fourth quarter of 2024 was $46 million as compared to $45 million for the fourth quarter of 2023.

    Net profit for the fourth quarter of 2024 was $55 million, reflecting $0.49 basic and diluted earnings per share. Net profit for the fourth quarter of 2023 was $54 million, or $0.49 basic and $0.48 diluted earnings per share.

    Cash flow generated from operating activities in the fourth quarter of 2024 was $101 million and investments in property and equipment, net were $93 million.

    Full year 2024 Results Overview
    Revenues for the full year of 2024 were $1.44 billion, gross profit was $339 million, operating profit was $191 million. Net profit for the full year of 2024 was $208 million, or $1.87 basic and $1.85 diluted earnings per share. For the full year of 2023, revenues were $1.42 billion, gross profit was $354 million, operating profit was $547 million and included $314 million, net, from the Intel merger contract termination and $33 million of restructuring income, net, from the previously disclosed reorganization and restructure of our Japan operations during 2022. Net profit for the full year of 2023 was $518 million, or $4.70 basic and $4.66 diluted earnings per share and included $290 million, net, due to the merger contract termination payment by Intel and $11 million restructuring income, net.

    Cash flow generated from operating activities for the year ended December 31, 2024, was $449 million. Investments in property and equipment, net for the year ended December 31, 2024, were $432 million and debt payments, net totaled $32 million.

    6” Fab Consolidation Update
    During the fourth quarter of 2024, the lower margin legacy of 150mm flows were discontinued in Fab1, with last Fab outs occurring in January 2025. The forward-looking strategic flows have been transferred into the Fab2 200mm factory. This strategic integration enables the Company to streamline its production processes, enhancing overall efficiency.

    Business Outlook
    Tower Semiconductor guides revenues for the first quarter of 2025 to be $358 million, with an upward or downward range of 5%. First quarter mid-range guidance reflects about 10% year-over-year growth.

    Russell Ellwanger, Chief Executive Officer of Tower Semiconductor, stated:
    “With the close of 2024, we are pleased with our progress, in having brought to market highly differentiated end application advancing platforms, hence strengthening our position for sustainable growth. Our 2025 revenue target is year-over-year growth, with sequential quarter-over-quarter revenue growth, and an acceleration in the second half of the year. This momentum is fueled by increasing production shipments as our previously announced capacity investments progress through the final stages of customer qualifications.”

    Ellwanger further added: “Our commitment to customer partnered innovation and streamlined execution continues to drive our ability to meet the growing and evolving needs of our customers in a quickly changing business environment, whilst expanding our available market size and share. We look forward to the year ahead with confidence and enthusiasm.”

    Teleconference and Webcast
    Tower Semiconductor will host an investor conference call today, Monday, February 10, 2025, at 10:00 a.m. Eastern time (9:00 a.m. Central time, 8:00 a.m. Mountain time, 7:00 a.m. Pacific time and 5:00 p.m. Israel time) to discuss the Company’s financial results for the fourth quarter and full year of 2024 and its business outlook.

    The call will be webcast and available through the Investor Relations section of Tower Semiconductor’s website at ir.towersemi.com. The pre-registration form required for dial-in participation is accessible here. Upon completing the registration, participants will receive the dial-in details, a unique PIN, and a confirmation email with all necessary information. To access the webcast, click here. The teleconference will be available for replay for 90 days.

    Non-GAAP Financial Measures
    The Company presents its financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). The financial information included in the tables below includes unaudited condensed financial data. Some of the financial information, which may be used and/or presented in this release and/or prior earnings related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, which we may describe as adjusted financial measures and/or reconciled financial measures, are non-GAAP financial measures as defined in Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission (the “SEC”) as they apply to our Company. These adjusted financial measures are calculated excluding the following: (i) amortization of acquired intangible assets as included in our costs and expenses, (ii) compensation expenses in respect of equity grants to directors, officers, and employees as included in our costs and expenses, (iii) merger contract termination fees received from Intel, net of associated cost and taxes following the previously announced Intel contract termination as included in net profit in 2023 and (iv) restructuring income, net, which includes income, net of cost and taxes associated with the reorganization and restructure of our operations in Japan including the cessation of operations of the Arai facility, which occurred during 2022, as included in net profit. These adjusted financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables also present the GAAP financial measures, which are most comparable to the adjusted financial measures used and/or presented in this release, as well as a reconciliation between the adjusted financial measures and the comparable GAAP financial measures. As used and/or presented in this release and/or prior earnings related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, as well as may be included and calculated in the tables herein, the term Earnings Before Interest Taxes, Depreciation and Amortization which we define as EBITDA consists of operating profit in accordance with GAAP, excluding (i) depreciation expenses, which include depreciation recorded in cost of revenues and in operating cost and expenses lines (e.g., research and development related equipment and/or fixed other assets depreciation), (ii) stock-based compensation expense, (iii) amortization of acquired intangible assets, (iv) merger contract termination fees received from Intel, net of associated cost following the previously announced Intel contract termination, as included in operating profit and (v) restructuring income, net in relation to the reorganization and restructure of our operations in Japan including the cessation of operations of the Arai facility, as included in operating profit. EBITDA is reconciled in the tables below and/or prior earnings-related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company from GAAP operating profit. EBITDA and the adjusted financial information presented herein and/or prior earnings-related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, are not a required GAAP financial measure and may not be comparable to a similarly titled measure employed by other companies. EBITDA and the adjusted financial information presented herein and/or prior earnings-related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, should not be considered in isolation or as a substitute for operating profit, net profit or loss, cash flows provided by operating, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP. The term Net Cash, as may be used and/or presented in this release and/or prior earnings-related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, is comprised of cash, cash equivalents, short-term deposits, and marketable securities less debt amounts as presented in the balance sheets included herein. The term Net Cash is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other companies and should not be considered in isolation or as a substitute for cash, debt, operating profit, net profit or loss, cash flows provided by operating, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP. The term Free Cash Flow, as used and/or presented in this release and/or prior earnings related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, is calculated to be net cash provided by operating activities (in the amounts of $101 million, $125 million and $126 million for the three months periods ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively and in the amounts of $449 million and $677 million for the years ended December 31, 2024 and December 31, 2023, respectively (less cash used for investments in property and equipment, net (in the amounts of $93 million, $128 million and $136 million for the three months periods ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively and in the amounts of $432 million and $432 million for the years ended December 31, 2024 and December 31, 2023, respectively). The term Free Cash Flow is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other companies and should not be considered in isolation or as a substitute for operating profit, net profit or loss, cash flows provided by operating, investing, and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP.

    About Tower Semiconductor
    Tower Semiconductor Ltd. (NASDAQ/TASE: TSEM), the leading foundry of high-value analog semiconductor solutions, provides technology, development, and process platforms for its customers in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. Tower Semiconductor focuses on creating a positive and sustainable impact on the world through long-term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, displays, integrated power management (BCD and 700V), photonics, and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle as well as process transfer services including development, transfer, and optimization, to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor owns one operating facility in Israel (200mm), two in the U.S. (200mm), two in Japan (200mm and 300mm) which it owns through its 51% holdings in TPSCo, shares a 300mm facility in Agrate, Italy with STMicroelectronics as well as has access to a 300mm capacity corridor in Intel’s New Mexico factory. For more information, please visit: www.towersemi.com.

    CONTACT:
    Liat Avraham | Investor Relations | +972-4-6506154 | liatavra@towersemi.com

    Forward-Looking Statements
    This release, as well as other statements and reports filed, stated and published in relation to this quarter’s results, includes certain “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, projections and statements with respect to our future business, financial performance and activities. The use of words such as “projects”, “expects”, “may”, “targets”, “plans”, “intends”, “committed to”, “tracking”, or words of similar import, identifies a statement as “forward-looking.” Actual results may vary from those projected or implied by such forward-looking statements and you should not place any undue reliance on such forward-looking statements, which describe information known to us only as of the date of this release. Factors that could cause actual results to differ materially from those projected or implied by such forward-looking statements include, without limitation, risks and uncertainties associated with: (i) demand in our customers’ end markets, (ii) reliance on acquisitions and/or gaining additional capacity for growth, (iii) difficulties in achieving acceptable operational metrics and indices in the future as a result of operational, technological or process-related problems, (iv) identifying and negotiating with third-party buyers for the sale of any excess and/or unused equipment, inventory and/or other assets, (v) maintaining current key customers and attracting new key customers, (vi) over demand for our foundry services resulting in high utilization and its effect on cycle time, yield and on schedule delivery, as well as customers potentially being placed on allocation, which may cause customers to transfer their business to other vendors, (vii) financial results that may fluctuate from quarter to quarter, making it difficult to forecast future performance, (viii) our debt and other liabilities that may impact our financial position and operations, (ix) our ability to successfully execute acquisitions, integrate them into our business, utilize our expanded capacity and find new business, (x) fluctuations in cash flow, (xi) our ability to satisfy the covenants stipulated in our agreements with our debt holders, (xii) pending litigation, (xiii) meeting the conditions set in approval certificates and other regulations under which we received grants and/or royalties and/or any type of funding from the Israeli, US and/or Japan governmental agencies, (xiv) receipt of orders that are lower than the customer purchase commitments and/or failure to receive customer orders currently expected, (xv) possible incurrence of additional indebtedness, (xvi) the effects of global recession, unfavorable economic conditions and/or credit crisis, (xvii) our ability to accurately forecast financial performance, which is affected by limited order backlog and lengthy sales cycles, (xviii) possible situations of obsolete inventory if forecasted demand exceeds actual demand when we create inventory before receipt of customer orders, (xix) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, fluctuations in operating results and future average selling price erosion, (xx) financing capacity acquisition related transactions, strategic and/or other growth or M&A opportunities, including funding Agrate fab’s significant 300mm capacity investments and acquisition or funding of equipment and other fixed assets associated with the capacity corridor transaction with Intel as announced in September 2023, in addition to other capacity and capability expansion plans, and the possible unavailability of such financing and/or the availability of such financing on unfavorable terms, (xxi) operating our facilities at sufficient utilization rates necessary to generate and maintain positive and sustainable gross, operating and net profit, (xxii) the purchase of equipment and/or raw material (including purchases beyond our needs), the timely completion of the equipment installation, technology transfer and raising the funds therefor, (xxiii) product returns and defective products, (xxiv) our ability to maintain and develop our technology processes and services to keep pace with new technology, including artificial intelligence, evolving standards, changing customer and end-user requirements, new product introductions and short product life cycles, (xxv) competing effectively, (xxvi) the use of outsourced foundry services by both fabless semiconductor companies and integrated device manufacturers, (xxvii) our dependence on intellectual property rights of others, our ability to operate our business without infringing others’ intellectual property rights and our ability to enforce our intellectual property against infringement, (xxviii) the Fab 3 landlord’s alleged claims that the noise abatement efforts made thus far are not adequate under the terms of the amended lease that caused him to request a judicial declaration that there was a material non-curable breach of the lease and that he would be entitled to terminate the lease, as well the ability to extend such lease or acquire the real estate and obtain the required local state and/or approvals required to be able to continue operations beyond the current lease term, (xxix) retention of key employees and recruitment and retention of skilled qualified personnel, (xxx) exposure to inflation, currency rates (mainly the Israeli Shekel, the Japanese Yen and the Euro) and interest rate fluctuations and risks associated with doing business locally and internationally, as well as fluctuations in the market price of our traded securities, (xxxi) meeting regulatory requirements worldwide, including export, environmental and governmental regulations, as well as risks related to international operations, (xxxii) potential engagement for fab establishment, joint venture and/or capital lease transactions for capacity enhancement in advanced technologies, including risks and uncertainties associated with the Agrate fab and the capacity corridor transaction with Intel as announced in September 2023, such as their qualification schedule, technology, equipment and process qualification, facility operational ramp-up, customer engagements, cost structure, required investments and other terms, which may require additional funding to cover their significant capacity investment needs and other payments, the availability of which funding cannot be assured on favorable terms, if at all, (xxxiii) potential liabilities, cost and other impacts that may be incurred or occur due to reorganization and consolidation of fabrication facilities, including the impact of cessation of operations of our facilities, including with regard to our 6 inch facility, (xxxiv) potential security, cyber and privacy breaches, (xxxv) workforce that is not unionized which may become unionized, and/or workforce that is unionized and may take action such as strikes that may create increased cost and operational risks, (xxxvi) the issuance of ordinary shares as a result of exercise and/or vesting of any of our employee equity, as well as any sale of shares by any of our shareholders, or any market expectation thereof, as well as the issuance of additional employee stock options and/or restricted stock units, or any market expectation thereof, which may depress the market value of the Company and the price of the Company’s ordinary shares and in addition may impair our ability to raise future capital, and (xxxvii) climate change, business interruptions due to floods, fires, pandemics, earthquakes and other natural disasters, the security situation in Israel, global trade “war” and the current war in Israel, including the potential inability to continue uninterrupted operations of the Israeli fab, impact on global supply chain to and from the Israeli fab, power interruptions, chemicals or other leaks or damages as a result of the war, absence of workforce due to military service as well as risk that certain countries will restrict doing business with Israeli companies, including imposing restrictions if hostilities in Israel or political instability in the region continue or exacerbate, and other events beyond our control. With respect to the current war in Israel, if instability in neighboring states occurs, Israel could be subject to additional political, economic, and military confines, and our Israeli facility’s operations could be materially adversely affected. Any current or future hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could have a material adverse effect on our business, financial condition and results of operations.

    A more complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this release or which may otherwise affect our business is included under the heading “Risk Factors” in the Company’s most recent filings on Forms 20-F and 6-K, as were filed with the SEC and the Israel Securities Authority. Future results may differ materially from those previously reported. The Company does not intend to update, and expressly disclaims any obligation to update, the information contained in this release.

    TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
    CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)  
    (dollars in thousands)  
      December 31,   December 31,  
      2024   2023  
    ASSETS        
    CURRENT ASSETS        
    Cash and cash equivalents $ 271,894   $ 260,664  
    Short-term deposits 946,351   790,823  
    Marketable securities —   184,960  
    Trade accounts receivable 211,932   154,067  
    Inventories 268,295   282,688  
    Other current assets 61,817   35,956  
    Total current assets 1,760,289   1,709,158  
    PROPERTY AND EQUIPMENT, NET 1,286,622   1,155,929  
    GOODWILL AND OTHER INTANGIBLE ASSETS, NET 10,196   12,115  
    OTHER LONG-TERM ASSETS 23,378   41,315  
    TOTAL ASSETS $ 3,080,485   $ 2,918,517  
    LIABILITIES AND SHAREHOLDERS’ EQUITY        
    CURRENT LIABILITIES        
    Short-term debt $ 48,376   $ 58,952  
    Trade accounts payable 130,624   139,128  
    Deferred revenue and customers’ advances 21,655   18,418  
    Other current liabilities 84,409   60,340  
    Total current liabilities 285,064   276,838  
    LONG-TERM DEBT 132,437   172,611  
    LONG-TERM CUSTOMERS’ ADVANCES 7,690   25,710  
    OTHER LONG-TERM LIABILITIES 15,114   16,319  
    TOTAL LIABILITIES 440,305   491,478  
    TOTAL SHAREHOLDERS’ EQUITY 2,640,180   2,427,039  
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 3,080,485   $ 2,918,517  
             
    TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  
    (dollars and share count in thousands, except per share data)  
      Three months ended  
      December 31,   September 30,   December 31,  
      2024   2024   2023  
    REVENUES $ 387,191   $ 370,512   $ 351,711  
    COST OF REVENUES 300,338   277,451   267,294  
    GROSS PROFIT 86,853   93,061   84,417  
    OPERATING COSTS AND EXPENSES:            
    Research and development 20,622   19,867   20,849  
    Marketing, general and administrative 19,812   17,432   18,401  
      40,434   37,299   39,250  
                 
    OPERATING PROFIT 46,419   55,762   45,167  
    FINANCING AND OTHER INCOME, NET 8,315   6,104   16,682  
    PROFIT BEFORE INCOME TAX 54,734   61,866   61,849  
    INCOME TAX EXPENSE, NET (2,149)   (7,026)   (10,130)  
    NET PROFIT 52,585   54,840   51,719  
    Net loss (profit) attributable to non-controlling interest 2,553   (193)   2,128  
    NET PROFIT ATTRIBUTABLE TO THE COMPANY $ 55,138   $ 54,647   $ 53,847  
    BASIC EARNINGS PER SHARE $ 0.49   $ 0.49   $ 0.49  
    Weighted average number of shares 111,493   111,237   110,796  
    DILUTED EARNINGS PER SHARE $ 0.49   $ 0.49   $ 0.48  
    Weighted average number of shares 112,967   112,474   111,308  
    RECONCILIATION FROM GAAP NET PROFIT ATTRIBUTABLE TO THE COMPANY TO ADJUSTED NET PROFIT ATTRIBUTABLE TO THE COMPANY:
    GAAP NET PROFIT ATTRIBUTABLE TO THE COMPANY $ 55,138   $ 54,647   $ 53,847  
    Stock based compensation 10,684   8,611   6,662  
    Amortization of acquired intangible assets 574   448   442  
    ADJUSTED NET PROFIT ATTRIBUTABLE TO THE COMPANY $ 66,396   $ 63,706   $ 60,951  
    ADJUSTED EARNINGS PER SHARE:            
    Basic $ 0.60   $ 0.57   $ 0.55  
    Diluted $ 0.59   $ 0.57   $ 0.55  
                 
    TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  
    (dollars and share count in thousands, except per share data)  
      Year ended  
      December 31,  
      2024   2023  
    REVENUES $ 1,436,122   $ 1,422,680  
    COST OF REVENUES 1,096,680   1,069,161  
    GROSS PROFIT 339,442   353,519  
    OPERATING COSTS AND EXPENSES:        
    Research and development 79,434   79,808  
    Marketing, general and administrative 74,964   72,454  
    Restructuring income, net * (6,270)   (32,506)  
    Merger-contract termination fee, net ** —   (313,501)  
      148,128   (193,745)  
             
    OPERATING PROFIT 191,314   547,264  
    FINANCING AND OTHER INCOME, NET 26,113   37,578  
    PROFIT BEFORE INCOME TAX 217,427   584,842  
    INCOME TAX EXPENSE, NET (10,205)   (65,312)  
    NET PROFIT 207,222   519,530  
    Net loss (profit) attributable to non-controlling interest 642   (1,036)  
    NET PROFIT ATTRIBUTABLE TO THE COMPANY $ 207,864   $ 518,494  
    BASIC EARNINGS PER SHARE $ 1.87   $ 4.70  
    Weighted average number of shares 111,153   110,289  
    DILUTED EARNINGS PER SHARE $ 1.85   $ 4.66  
    Weighted average number of shares 112,343   111,216  
    * Restructuring income, net resulted from the previously disclosed reorganization and restructure of our Japan operations during 2022.  
    ** Merger-contract termination fee received from Intel during the third quarter of 2023, net of associated cost.  
             
    RECONCILIATION FROM GAAP NET PROFIT ATTRIBUTABLE TO THE COMPANY TO ADJUSTED NET PROFIT ATTRIBUTABLE TO THE COMPANY:
    GAAP NET PROFIT ATTRIBUTABLE TO THE COMPANY $ 207,864   $ 518,494  
    Stock based compensation 33,837   27,931  
    Amortization of acquired intangible assets 1,918   1,923  
    Restructuring income, net *** (2,634)   (11,224)  
    Merger-contract termination fee, net **** —   (289,988)  
    ADJUSTED NET PROFIT ATTRIBUTABLE TO THE COMPANY $ 240,985   $ 247,136  
    ADJUSTED EARNINGS PER SHARE:        
    Basic $ 2.17   $ 2.24  
    Diluted $ 2.15   $ 2.22  
    *** Restructuring income, net resulted from the previously disclosed reorganization and restructure of our Japan operations during 2022, net of tax.
    **** Merger-contract termination fee received from Intel during the third quarter of 2023, net of associated cost and tax.
    TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
    CONSOLIDATED SOURCES AND USES REPORT (UNAUDITED)  
    (dollars in thousands)  
      Three months ended  
      December 31,   September 30,   December 31,  
      2024   2024   2023  
    CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD $ 270,979   $ 265,313   $ 314,816  
    Net cash provided by operating activities 100,816   124,743   126,098  
    Investments in property and equipment, net (93,396)   (127,624)   (136,426)  
    Debt received (repaid), net 2,795   (16,402)   (8,950)  
    Effect of Japanese Yen exchange rate change over cash balance (4,972)   5,537   2,101  
    Proceeds from (investment in) deposits, marketable securities and other assets, net (4,328)   19,412   (36,975)  
    CASH AND CASH EQUIVALENTS – END OF PERIOD $ 271,894   $ 270,979   $ 260,664  
      Year ended      
      December 31,   December 31,      
      2024   2023      
    CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD $ 260,664   $ 340,759      
    Net cash provided by operating activities 448,682   676,561 *    
    Investments in property and equipment, net (431,653)   (432,184)      
    Debt repaid, net (32,455)   (32,346)      
    Proceeds from investment in subsidiary —   1,932      
    Effect of Japanese Yen exchange rate change over cash balance (4,758)   (5,395)      
    Proceeds from (investment in) deposits, marketable securities and other assets, net 31,414   (288,663)      
    CASH AND CASH EQUIVALENTS – END OF PERIOD $ 271,894   $ 260,664      
    * Merger-contract termination fee received from Intel during 2023, net of associated cost, in the amount of $313,501  
    was included within the net cash provided by operating activities for the year ended December 31, 2023.  
     TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES  
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  
    (dollars in thousands)  
      Year ended  
      December 31,   December 31,  
      2024   2023  
    CASH FLOWS – OPERATING ACTIVITIES        
    Net profit for the period $ 207,222   $ 519,530  
    Adjustments to reconcile net profit for the period        
    to net cash provided by operating activities:        
    Income and expense items not involving cash flows:        
    Depreciation and amortization * 266,279   258,021  
    Effect of exchange rate differences and fair value adjustment 133   (1,632)  
    Other expense (income), net 24,721   (7,047)  
    Changes in assets and liabilities:        
    Trade accounts receivable (60,169)   (3,160)  
    Other current assets (33,992)   (9,541)  
    Inventories 4,778   8,682  
    Trade accounts payable 35,784   (8,254)  
    Deferred revenue and customers’ advances (14,783)   (35,676)  
    Other current liabilities 22,021   (70,163)  
    Other long-term liabilities (3,312)   25,801  
    Net cash provided by operating activities 448,682   676,561 **
    CASH FLOWS – INVESTING ACTIVITIES        
    Investments in property and equipment, net (431,653)   (432,184)  
    Proceeds from (investments in) deposits, marketable securities and other assets, net 31,414   (288,663)  
    Net cash used in investing activities (400,239)   (720,847)  
    CASH FLOWS – FINANCING ACTIVITIES        
    Debt repaid, net (32,455)   (32,346)  
    Proceeds from investment in subsidiary —   1,932  
    Net cash used in financing activities (32,455)   (30,414)  
    EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE (4,758)   (5,395)  
             
    INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 11,230   (80,095)  
    CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD 260,664   340,759  
    CASH AND CASH EQUIVALENTS – END OF PERIOD $ 271,894   $ 260,664  
    * Includes amortization of acquired intangible assets and stock based compensation in the amounts of $35,755  
    and $29,854 for the years ended December 31, 2024, and December 31, 2023, respectively.      
    ** Merger-contract termination fee received from Intel during the third quarter of 2023, net of associated cost, in the amount
    of $313,501 was included within the net cash provided by operating activities for the year ended December 31, 2023.
             

    The MIL Network –

  • MIL-OSI USA: Tillis, Kelly Introduce Bipartisan Legislation to Increase Access to Non-Opioid Treatments

    US Senate News:

    Source: United States Senator for North Carolina Thom Tillis

    WASHINGTON, D.C. –  This week, Senators Thom Tillis (R-NC) and Mark Kelly (D-AZ) led the introduction of the Alternatives to Prevent Addiction in the Nation (Alternatives to PAIN) Act, bipartisan legislation that would provide greater access to non-opioid treatments for pain management for seniors.

    “The opioid crisis continues to wreak havoc on families and communities across the country, including in North Carolina,” said Senator Tillis. “This bipartisan, pragmatic legislation will help prevent opioid addiction before it starts by leveling the playing field for non-opioid alternatives, ensuring seniors have uninterrupted access to non-opioid, non-addictive alternatives.”

    “Arizona seniors managing pain deserve real choices—not a system that steers them toward addictive opioids just because they’re the cheaper option,” said Senator Kelly. “By expanding affordable access to safer, non-opioid treatments, we’re helping prevent addiction and giving seniors better options for attending their health.” 

    “One way to prevent opioid addiction is by avoiding unnecessary exposure to prescription opioids,” said Chris Fox, Executive Director, Voices for Non–Opioid Choices. “To do so, providers and patients must have easy and equal access to non-opioid pain management options. Unfortunately, non-opioid approaches are all-too-often out of reach for many Americans due institutional preferences and economic incentives that lead to our reliance on opioids to treat pain. This results in millions of Americans developing a new, long-term opioid use pattern every year. The Alternatives to Prevent Addiction in the Nation (“Alternatives to PAIN”) Act would ensure that non-opioid approaches are just as easily accessible as other medications. The legislation will go a long way towards ensuring that all Americans in all settings can access such approaches. It is a much needed step towards preventing opioid addiction in America and Voices for Non-Opioid Choices proudly supports and urges enactment of this critical legislation.” 

    Background:

    The Alternatives to Prevent Addiction in the Nation (Alternatives to PAIN) Act is cosponsored by Senators Shelley Moore Capito (R-WV), Tim Kaine (D-VA), Katie Britt (R-AL), Jeanne Shaheen (D-NH), Ted Budd (R-NC), Chris Coons (D-DE), John Cornyn (R-TX), Cory Booker (D-NJ), Jerry Moran (R-KS), Michael Bennet (D-CO), Jim Banks (R-IN), Alex Padilla (D-CA), Steve Daines (R-MT), and Mark Warner (D-VA). 

    The United States is facing a public health crisis caused by prescription drug addiction. Unfortunately, our country’s seniors are not immune to the worsening opioid epidemic. In 2021, 1.1 million seniors were diagnosed with an opioid use disorder, and 50,000 seniors experienced an opioid overdose-from prescription opioids, illicit opioids, or both. Tragically, the number of Americans aged 65 and older who died as the result of a natural or semisynthetic opioid overdose increased 63 percent between 2012 and 2020.

    Now, more than ever, we must prevent unnecessary opioids from becoming prevalent in medicine cabinets, homes, and communities. We can do this by increasing the use of non-opioids for pain management. Non-opioid treatments and therapies can be successful in replacing, delaying, or reducing the use of opioids which is why we believe it is necessary for Congress to advance policies that give practitioners and patients more access to these non-addictive treatments.

    The opioid epidemic is estimated to cost U.S. taxpayers $1.5 trillion every year. Too often, cost considerations incentivize Medicare Part D sponsors to employ utilization management practices intended to steer patients towards lowest cost options, which typically end up being generic opioids. This has resulted in opioid prescribing in Medicare Part D increasing over the past decade. In fact, Medicare Part D’s share of overall opioid prescriptions dispensed in the United States has increased 75 percent just since 2011. With several new opioid alternatives in the pipeline and others currently on the market, it is essential we encourage robust access to these therapies for Medicare Part D beneficiaries. 

    This bipartisan legislation would: 

    • Limit patient cost-sharing for patients receiving non-opioid based pain relief under Medicare Part D plans;
    • Prohibit the utilization of step therapy and prior authorization for these drugs; and
    • Encourage the continued dialogue between patients and their healthcare professionals about preferences in pain management choices.  

    This legislation builds on the Non-Opioids Prevent Addiction in the Nation (NO PAIN) Act, legislation supported by Senator Tillis that was signed into law in December 2022. The NO PAIN Act directed the Centers for Medicare & Medicaid Services (CMS) to provide separate Medicare reimbursement for non-opioid treatments used to manage pain in both the hospital outpatient department (HOPD) and the ambulatory surgery center (ASC) settings. Prior to the NO PAIN Act being signed into law, hospitals received the same payment from Medicare regardless of whether a physician prescribed an opioid or a non-opioid. As a result, hospitals relied on opioids, which are typically dispensed by a pharmacy after discharge at little or no cost to the hospital. 

    The Alternatives to Prevent Addiction in the Nation (Alternatives to PAIN) Act is supported by the following organizations:  Voices for Non-Opioid Choices, Ambulatory Surgery Center Association, American Addiction Recovery Coalition, American Association of Oral and Maxillofacial Surgeons, American Psychological Association Services, Asheville Equine Therapy, A Better Life-Brianna’s Hope, A Voice in the Wilderness Empowerment Center, Blue Water Recovery & Outreach Center, CA Black Health Network, Center of Addiction & Faith, Chatham Drug Free, Clean Living Exceptional Alternative Recovery Residences (CLEARR), Danny’s Ride, Dove Recovery Center for Women, Elderly Advocates, Families of Addicts, Freedom Through Recovery, Georgia for Recovery, Hawaii Health and Harm Reduction Center, Healing On The Fly Inc, Hear Alex’s Story, Hep Free Hawaii, Hernando Community Coalition, Herren Project, Holistic Homes for Us, Hope Haven, Inclusive Recovery, InStep Indy, Iron Tribe Network, Jake’s Reach, Journey House Foundation, LITE Recovery Café, Lifeboat Addiction Services, Medicare Rights Center, Mental Health America, Mental Health America of Illinois, Metro Drug Coalition, Michigan Women Veterans Empowerment, National Association of Social Workers, National Certification Commission for Acupuncture and Oriental Medicine, National Hispanic Medical Association, National Rural Health Association, National Safety Council, National Transitions of Care Coalition, Operation First Response, Inc, Operation PAR, Overdose Lifeline, Parrott Creek Child and Family Services, Partnership for A Healthy Iowa, Partnership to End Addiction, Pennsylvania Mental Health Consumers Association, Pledge for Life Partnership, Positive Action Against Chemical Addiction, Inc. (PAACA), Prevention Action Alliance, Prevention Alliance of Tennessee, Psychophysiologic Disorders Association, PTSD Awareness Summit, REAL LIFE, Recovery Café- Ft. Wayne, Recovery Café- Muncie, Recovery Mobile Clinic, RetireSafe, Safe Haven Recovery Engagement Center, Salvage USA, Shatterproof, She Recovers Foundation, Sobar, Society for Opioid-Free Anesthesia, Society of Behavioral Medicine, South End – Roxbury Community Partnership, Stayin Alive 24 Coalition, Team Sharing, Inc., The Battle Within, U.S. VETS, VetPark’s A.T.V., Veterans National Recovery Center, Voices For Awareness, Warren Coalition, Warrior Path Home, West Warwick Prevention Coalition, Will Bright Foundation, Wyoming Valley Drug & Alcohol Services, and Young People in Recovery.

    Full text of the legislation is available HERE. 

    Additional statements of support are available HERE.

    MIL OSI USA News –

  • MIL-OSI United Kingdom: expert reaction to Public Accounts Committee report on Carbon Capture, Usage, and Storage (CCUS) Technologies

    Source: United Kingdom – Executive Government & Departments

    Scientists comment on the Public Accounts Committee (PAC) report on Carbon Capture, Usage and Storage (CCUS) technologies. 

    Prof Hannah Chalmers, Personal Chair of Sustainable Energy Systems, Institute for Energy Systems, School of Engineering, University of Edinburgh, said:

    “CCUS technologies can play a unique role in tackling carbon dioxide emissions.  They can be used at large industrial sites to ensure that most of the carbon dioxide produced by activities like iron and steel production is not emitted to the atmosphere.  Instead, the carbon dioxide is permanently stored in geological formations (rocks).  In the UK, CCUS projects are developing plans to store carbon dioxide in layers of rock that are deep underneath the sea.

    “There is also ongoing work to develop and deploy cost-effective approaches to remove carbon dioxide directly from the air.  This provides an important option to respond to the widely reported increases in carbon dioxide levels in the atmosphere that are causing significant concern.

    “There is significant evidence that including CCUS in a mix of technologies to reduce carbon dioxide emissions will be the most cost-effective way to address climate change.  Several large-scale projects have been operating in other countries for many years.  Experience from these projects is being used to ensure that the CCUS projects that are being developed in the UK are designed to be reliable and cost-effective.”

     

    Dr Stuart Gilfillan, Reader in Geochemistry, University of Edinburgh, said:

    What is CCUS technology, how does it work, does it have limitations?

    “CCUS stands for Carbon Capture, Utilisation, and Storage, which is a developing technology which reduces the amount of carbon dioxide (CO2) released into the atmosphere. It works by capturing CO2 at the point source, transporting it and then burying it for safe storage in rocks over a kilometre below the ground surface. Like any technology, it has pros and cons, and costs more than simply releasing the CO2 directly to the atmosphere, which is currently free. CCUS is the only currently available technology that can directly reduce CO2 emissions from sources like power plants and industrial processes. Given that global temperature records are now being broken on an almost daily basis and yesterday’s announcement of the hottest January on record, it is essential tool in the urgent fight against runaway climate change.

    What is the existing evidence around the efficacy of CCUS?

    “CO2 capture technology has proven successful in capturing up to 90-95% of CO2 emissions from point of sources from power stations and industrial facilities. Successful examples include the Boundary Dam power station in Saskatchewan, Canada, where a large-scale CCUS unit has been operational since 2014, capturing about 1 million tonnes of CO2 per year.

    “The long-term storage of CO2 is proven by natural CO2 reservoirs around the world and engineered projects like Sleipner in the North Sea, which have been injecting CO2 beneath the seabed since 1996 without significant issues. Research over the past two decades has developed monitoring technologies that can detect and mitigate potential leakage and to ensure that CO2 remains securely buried in rocks deep underground.

    What more evidence may be needed to be confident in its applications?

    “No more evidence is required, as exemplified by the UK’s Climate Change Committee (CCC), which is an independent body established under the Climate Change Act who advise the government on emissions targets and report to Parliament on progress made in reducing greenhouse gas emissions. The CCC is clear that CCUS is a critical technology for the decarbonisation of the UK economy, particularly in sectors that are hard to decarbonize directly, such as heavy industry (steel, cement, chemicals) and power generation.

    “CCUS is not only as a standalone technology but is an essential part of a broader strategy to reach net-zero emissions by 2050. It compliments energy efficiency, renewable energy deployment, and electrification. CCUS is a clear driver for regional economic development, particularly in regions with suitable geological storage sites and industrial bases, such as the East Coast of Scotland, the Humber region, and North East England, areas that have been ‘left behind’ in recent times.”

     

    Dr Tim Dixon, IEA Greenhouse Gas, Director and General Manager, said:

    “Carbon Capture and Storage (CCS) is a necessary technology for the UK and other countries to achieve net-zero, and we need all low-carbon energy technologies. The science case for the role of CCS is provided by the UK’s Climate Change Committee, the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) and cannot be disputed if climate change is to be taken seriously. The key aspect of CCS is the secure long-term retention of CO2 in deep geological formations, and we have decades of experience in this from around the world. With over 40 large scale projects in operation injecting millions of tonnes every year and many pilot-scale projects, this has allowed us to test the science, the monitoring and the practicalities of geological storage of CO2. Hence CO2 geological storage is a proven technology and the regulations to enable and to ensure that it is safe and secure are based upon this sound science and experience. ”

     

    Professor Paul Fennell FIchemE, Professor of Clean Energy, Imperial College London, said:

    “The idea that Carbon Capture and Storage is an unproven technology is simply untrue.  There are projects ongoing around the world, and millions of tonnes of CO2 have been safely stored over the last couple of decades.  This has not happened in the U.K. because of our sclerotic inability to develop public infrastructure, not because the technology is unproven.”

     

    Dr Greg Mutch, Researcher in Carbon Capture and Storage, Newcastle University, said:

    “Carbon capture and storage is a technology that prevents carbon dioxide from entering the atmosphere, by capturing it and storing it underground in ‘empty’ oil & gas reservoirs or saline aquifers. According to the world’s foremost experts on the subject, gathered to contribute the International Panel on Climate Change, carbon capture and storage processes are necessary to achieve climate change mitigation goals at lowest cost. Without scalable CCS technologies by the end of the century, climate change mitigation will cost between 29 and 297% (mean value 138%) more.[1] Moreover, CCS is predicted to provide tens of thousands of jobs in the UK, add several billion pounds in terms of gross value added per year by 2050,[2] and enable other important technologies (hydrogen production etc) that will come with further jobs and economic value.”

    [1] IPCC, 2018: Global Warming of 1.5 °C. An IPCC Special Report on the impacts of global warming of 1.5 °C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, ed. V. Masson-Delmotte, P. Zhai, H.-O. Portner, D. Roberts, J. Skea, P. R. Shukla, A. Pirani, W. Moufouma-Okia, C. Pean, R. Pidcock, S. Connors, J. B. R. Matthews, Y. Chen, X. Zhou, M. I. Gomis, E. Lonnoy, T. Maycock, M. Tignor and T. Waterfield, Cambridge University Press, 2018.

    [2] Energy Innovation Needs Assessment Sub-theme report: Carbon capture, utilisation, and storage, Vivid Economics, Carbon Trust, E4tech, Imperial College London, Frazer-Nash Consultancy, Energy Systems Catapult. Commissioned by the Department for Business, Energy & Industrial Strategy, 2019.

    Professor Peter Styring, Director of the UK Centre for Carbon Dioxide Utilization, Professor of Chemical Engineering & Chemistry, University of Sheffield, said:

    What is CCUS technology, how does it work, does it have limitations?

    “CCUS is carbon capture and storage. This has been primarily focused on CCS as the main driver. It aims to capture carbon dioxide from emitters such as power stations and industries. The current technology temperature swing absorption (TSA)  using a chemical reaction with an aqueous amine solvent to capture the CO2 from the mixed waste gas and then to release it in a purified form by increased temperature chemical desorption and then further drying and purification to get a gas that can be in theory transported to a site where the gas can be stored underground. It works but at a high energy cost and the production of amine decomposition products that need to be removed and more amine added. It costs a lot!

    “Limitations are the energy and financial costs, permitting regulations on solvent disclosure and the large physical footprint. Full system lifecycle analysis is required but this is not always reported.”

    What is the existing evidence around the efficacy of CCUS?

    “This is not proven using current technologies. The problem is that the current government funded projects use old technologies to achieve CCS and what is actually needed is a step change to new, lower cost more efficient processes such as solid based pressure swing adsorption (PSA). The whole system tends to be simpler and the energy costs and land use is significantly reduced.”

    What more evidence may be needed to be confident in its applications?

    “Full evaluation of new technologies and rapid acceleration from proof of concept to capture at scale. The Innovate UK funded Flue2Chem project is a good example of how this is being addressed using mid-TRL technologies. The UK also needs to move away from a single minded storage approach to adding value through the use of CO2 in the production of chemicals that would otherwise be sourced from virgin fossil carbon. SUSTAIN project is making synthetic fuels from captured CO2 and Flue2Chem is making FMCG components, including surfactants and precursors from the CO2.”

     

    Dr Stuart Jenkins, Net Zero Fossil Fuel Fellow, University of Oxford, said:

    “The Public Accounts Committee are wrong to have labelled CCUS as ‘unproven’, there are many commercial scale projects around the world, but they are right to question the current model for funding it. We need to make sure the CCUS industry becomes self-sustaining, without the need for major taxpayer funding. One option — asking fossil fuel suppliers to contribute to these costs via a carbon storage mandate — is a fair and responsible approach going forward.

    In a recent report we published working with researchers at the University of Oxford and Carbon Balance Initiative [1] we looked at the use of Carbon Storage Mandates, which place an obligation on fossil fuel producers to capture and store a rising fraction of the CO2 they produce, to support the UK’s CCUS industry. 

    Carbon storage mandates, in tandem with carbon pricing and other mechanisms, could deliver subsidy-free CCUS to the UK and provide investment certainty for companies.”

    [1]- https://www.carbon-balance.earth/briefs-reports/report-markets-and-mandates 

    https://committees.parliament.uk/committee/127/public-accounts-committee/news/205139/carbon-capture-high-degree-of-uncertainty-whether-risky-investment-by-govt-will-pay-off/#:~:text=In%20a%20report%20published%20today,and%20the%20cost%20of%20living

    Declared interests

    Dr Stuart Jenkins Our report was funded by the Carbon Capture and Storage Association, and consulted regulators, fossil fuel companies, capture and storage entities, UK Government, and academics on models for CCUS sector support packages. 

    Professor Paul Fennell: No conflicts other than being involved in CCs research.

    Dr Tim Dixon: “Tim is a Director of IEA Environmental Projects Ltd (UK), a Non-Executive Director on the Board for The International CCS Knowledge Centre (Canada). He is also proud to be an Honorary Senior Research Fellow at the Bureau of Economic Geology, University of Texas in Austin, and an Honorary Lecturer at the School of Geosciences at University of Edinburgh. He was an original Board Member of the UK CCS Research Centre. Previously he worked in CCS, emissions trading, clean energy technologies and related areas for AEA Technology (ETSU), for the UK Government‘s Department of Trade and Industry (DTI) and for the Global CCS Institute. He was the EU’s Lead Negotiator for getting CCS in the CDM in UNFCCC in 2011, and a UK negotiator for getting CCS in the London Convention 2004-7, in OSPAR 2006-7, in the EU Emission Trading Scheme 2004-8, and inputting to the EU CCS Directive 2007-8. He gives talks on climate and CCS to schools and public organisations and supported the start of Oxford Climate Society at the University of Oxford. He is a Fellow of the UK Energy Institute, and member of the UK Institute of Physics and the UK Environmental Law Association.”

    Dr Stuart Gilfillan “I have received funding from TotalEnergies in the past, for research related to CO2 origins in the subsurface and reservoir connectivity and Equinor on CO2 dissolution in natural CO2 reservoirs. I currently receive funding from the Natural Environment Research Council and Carbfix on CO2 mineralisation.”

    Prof Hannah Chalmers “I work collaboratively with industrial partners who are developing CCUS projects in the UK (e.g. as a member of the Advisory Board for the Industrial Decarbonisation Research and Innovation Centre).  I currently receive no funding from industry, but have received funding from industrial partners who are actively developing CCUS projects in the UK in the past (e.g. SSE plc).”

    Professor Peter Styring: Peter is Professor of Chemical Engineering and Chemistry at the University of Sheffield (an investigator on Flue2Chem and SUSTAIN) and a Co-founder and Director of CCU International.

    For all other experts, no response to our request for DOIs was received.

    MIL OSI United Kingdom –

  • MIL-OSI: Track Group Reports 1st Quarter Fiscal 2025 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    NAPERVILLE, Ill., Feb. 07, 2025 (GLOBE NEWSWIRE) — Track Group, Inc. (OTCQB: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its fiscal quarter ended December 31, 2024 (“Q1 FY25”). In Q1 FY25, the Company posted (i) total revenue of $8.7 Million (“M”), a decrease of approximately 3.3% over total revenue of $9.0M for the quarter ended December 31, 2023 (“Q1 FY24”); (ii) Q1 FY25 operating income of $0.1M compared to Q1 FY24 operating loss of ($0.2M); and (iii) net loss attributable to common shareholders of ($2.0M) in Q1 FY25 compared to net income attributable to common shareholders of $0.1M in Q1 FY24.

    “The quarter ending December 31, 2024 showed increases in gross profit, operating income and Adjusted EBITDA. This progress reflects the increased use of our products and services in legacy programs and continued expansion through newly awarded contracts domestically and abroad. With a strong pipeline and a commitment to delivering value, we are poised for continued success in fiscal year 2025,” said Derek Cassell, Track Group’s CEO. 

    FINANCIAL HIGHLIGHTS

    • Total Q1 FY25 revenue of $8.7M decreased approximately 3.3% compared to Q1 FY24 revenue of $9.0M. The decrease in revenue was driven principally by a decrease in people assigned to monitoring for clients in Michigan and Virginia, and our recently sold Chilean subsidiary. This decrease was partially offset by revenue increases for clients in Illinois, Puerto Rico and the Bahamas who experienced increases in the number of people assigned to monitoring.
    • Gross profit of $4.4M in Q1 FY25 increased approximately 5.2% compared to Q1 FY24 gross profit of $4.2M due to a decrease in monitoring center costs, partially offset by a decrease in revenue.
    • Operating income in Q1 FY25 of $0.1M increased compared to the operating loss of ($0.2M) in Q1 FY24. The increase in net income in Q1 FY25 is primarily due to a decrease in cost of revenue and a decrease in operating expense.
    • Adjusted EBITDA for Q1 FY25 of $1.2M, increased compared to $1.1M for Q1 FY24 due to an increase in operating income and gross profit. Adjusted EBITDA in Q1 FY25 as a percentage of revenue increased to 14.4%, compared to 11.8% for Q1 FY24 for the same reasons.
    • Unrestricted cash balance of $3.7M for Q1 FY25 increased compared to $3.6M for Q1 FY24. The change in cash position was principally due to the sale of our Chilean subsidiary.
    • Net loss attributable to shareholders in FY24 was ($2,010,849) compared to net income of $461 in FY23, a change principally attributable to lower revenue and a foreign currency exchange rate loss.

    Business Outlook

    Growth in gross profit and operating income in Q1 FY25 reinforces our confidence in the strategic reinvestment in technology and the implementation of new programs initiated in late FY23. These endeavors position us well for sustained growth throughout FY25. As a result, the Company’s preliminary outlook for FY25 is as follows: 

      Actual     Outlook
      FY 2023     FY 2024     FY 2025
    Revenue: $34.5 M   $36.9 M   $35M  –  $36M
                   
    Adjusted EBITDA Margin: 11.1 %   14.6 %   14%  –  15%


    About Track Group, Inc.
    Track Group designs, manufactures, and markets location tracking devices; as well as develops and sells a variety of related software, services, and accessories, networking solutions, and monitoring applications. The Company’s products and services are designed to empower professionals in security, law enforcement, corrections, and rehabilitation organizations worldwide with single-sourced offender management solutions that integrate reliable intervention technologies to support re-socialization and monitoring initiatives.

    The Company currently trades under the ticker symbol “TRCK” on the OTCQB exchange. For more information, visit www.trackgrp.com.

    Forward-Looking Statements
    Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “if”, “should” and “will” and similar expressions as they relate to Track Group, Inc., and subsidiaries (“Track Group”) are intended to identify such forward-looking statements. These statements are only predictions and reflect Track Group’s current beliefs and expectations with respect to future events and are based on assumptions and subject to risks and uncertainties and subject to change at any time. Track Group may from time-to-time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see “Risk Factors” in Track Group’s annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. New risks emerge from time to time. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

    Non-GAAP Financial Measures
    This release includes financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission including non-GAAP EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures are based on the financial figures for the respective period.

    Non-GAAP Adjusted EBITDA excludes items included but not limited to interest, taxes, depreciation, amortization, impairment charges, gains and losses, currency effects, one-time charges or benefits that are not indicative of operations, charges to consolidate, integrate or consider recently acquired businesses, costs of closing facilities, stock based or other non-cash compensation or other stated cash and non-cash charges (the “Adjustments”).

    The Company believes the non-GAAP measures provide useful information to both management and investors when factoring in the Adjustments. Specific disclosure regarding the Company’s financial results, including management’s analysis of results from operations and financial condition, are contained in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2023, and other reports filed with the Securities and Exchange Commission. Investors are encouraged to carefully read and consider such disclosure and analysis contained in the Company’s Form 10-K and other reports, including the risk factors contained in such Form 10-K.

    TRACK GROUP, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
     
      (Unaudited)          
      December 31,     September 30,  
      2024     2024  
    Assets              
    Current assets:              
    Cash $ 3,740,043     $ 3,574,215  
    Accounts receivable, net of allowance for credit losses of $525,141 and $432,904 respectively   5,319,041       4,428,535  
    Prepaid expense and deposits   420,680       638,293  
    Inventory, net of reserves of $99,041 and $82,848, respectively   811,992       582,481  
    Assets held for sale   –       969,481  
    Total current assets   10,291,756       10,193,005  
    Property and equipment, net of accumulated depreciation of $293,419 and $430,003, respectively   351,353       317,206  
    Monitoring equipment, net of accumulated depreciation of $5,145,204 and $5,982,972, respectively   4,550,033       4,598,864  
    Intangible assets, net of accumulated amortization of $19,954,086 and $19,699,966, respectively   13,415,776       13,959,571  
    Goodwill   7,913,369       7,941,190  
    Other assets, net   1,238,608       660,170  
    Total assets $ 37,760,895     $ 37,670,006  
                   
    Liabilities and Stockholders’ Equity (Deficit)              
    Current liabilities:              
    Accounts payable $ 3,336,084     $ 3,082,467  
    Accrued liabilities   2,542,932       2,639,318  
    Liabilities held for sale   –       732,028  
    Total current liabilities   5,879,016       6,453,813  
    Long-term debt, net of current portion   42,659,634       42,639,197  
    Long-term liabilities   679,823       186,407  
    Total liabilities   49,218,473       49,279,417  
                   
    Stockholders’ equity (deficit):              
    Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,863,758 and 11,863,758 shares outstanding, respectively   1,186       1,186  
    Preferred stock, $0.0001 par value: 20,000,000 shares authorized; 0 shares outstanding   –       –  
    Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding   –       –  
    Paid in capital   302,600,546       302,600,546  
    Accumulated deficit   (315,274,178 )     (312,691,811 )
    Accumulated other comprehensive loss   1,214,868       (1,519,332 )
    Total equity (deficit)   (11,457,578 )     (11,609,411 )
    Total liabilities and stockholders’ equity (deficit) $ 37,760,895     $ 37,670,006  
    TRACK GROUP, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
    (Unaudited)
     
      Three Months Ended
    December 31,    		  
      2024     2023  
    Revenue:              
    Monitoring and other related services $ 8,441,307     $ 8,674,485  
    Product sales and other   227,021       292,487  
    Total revenue   8,668,328       8,966,972  
                   
    Cost of revenue:              
    Monitoring, products and other related services   3,508,762       3,973,989  
    Depreciation and amortization included in cost of revenue   735,224       789,463  
    Total cost of revenue   4,243,986       4,763,452  
                   
    Gross profit   4,424,342       4,203,520  
                   
    Operating expense:              
    General & administrative   2,431,118       2,757,887  
    Selling & marketing   901,189       706,531  
    Research & development   669,391       682,463  
    Depreciation & amortization   227,553       239,760  
    Loss on sale of subsidiary   66,483       –  
    Total operating expense   4,295,734       4,386,641  
                   
    Operating income (loss)   128,608       (183,121 )
                   
    Other income (expense):              
    Interest income   2,839       48,162  
    Interest expense   (571,798 )     (486,084 )
    Currency exchange rate gain (loss)   (1,499,262 )     538,945  
    Total other income (expense)   (2,068,221 )     101,023  
    Net income (loss) before income taxes   (1,939,613 )     (82,098 )
    Income tax expense (benefit)   71,236       (82,559 )
    Net income (loss) attributable to common stockholders   (2,010,849 )     461  
    Release of cumulative translation adjustment for sale of subsidiary   1,390,913       –  
    Equity adjustment for sale of subsidiary   571,518       –  
    Foreign currency translation adjustments   771,769       (106,702 )
    Comprehensive income (loss) $ 723,351     $ (106,241 )
    Net income (loss) per share – basic:              
    Net income (loss) per common share $ (0.17 )   $ 0.00  
    Weighted average common shares outstanding   11,863,758       11,863,758  
                   
    Net income (loss) per share – diluted:              
    Net income (loss) per common share $ (0.17 )   $ 0.00  
    Weighted average common shares outstanding   11,863,758       11,863,758  
    TRACK GROUP, INC. AND SUBSIDIARIES
    NON-GAAP ADJUSTED EBITDA DECEMBER 31 (UNAUDITED)
    (amounts in thousands, except share and per share data)
     
      Three Months Ended
    December 31,    		  
      2024     2023  
                   
    Non-GAAP Adjusted EBITDA              
    Net income (loss) attributable to common shareholders $ (2,011 )   $ –  
    Interest expense, net   569       438  
    Depreciation and amortization   963       1,029  
    Income taxes (1)   71       (83 )
    Board compensation and stock-based compensation   75       53  
    Foreign exchange expense (gain)   1,499       (539 )
    Loss on sale of subsidiary   66       –  
    Other charges (2)   18       164  
    Total Non-GAAP Adjusted EBITDA $ 1,250     $ 1,062  
    Non-GAAP Adjusted EBITDA, percent of revenue   14.4 %     11.8 %
                   
    Non-GAAP earnings per share – basic:              
    Weighted average common shares outstanding   11,863,758       11,863,758  
    Non-GAAP earnings per share $ 0.11     $ 0.09  
                   
    Non-GAAP earnings per share – diluted:              
    Weighted average common shares outstanding   11,863,758       11,863,758  
    Non-GAAP earnings per share $ 0.11     $ 0.09  
      (1 ) Currently, the Company has significant U.S. tax loss carryforwards that may be used to offset future taxable income, subject to IRS limitations. However, the Company is still subject to certain state, commonwealth, and other foreign based taxes.
           
      (2 ) Other charges are expenses related to the board of directors, severance, and other Chile monitoring center costs for our recently sold subsidiary.

    James Berg
    Chief Financial Officer
    jim.berg@trackgrp.com

    The MIL Network –

  • MIL-OSI: Byrna Technologies Reports Record Results for Fiscal Fourth Quarter and Full Year 2024

    Source: GlobeNewswire (MIL-OSI)

    ANDOVER, Mass., Feb. 07, 2025 (GLOBE NEWSWIRE) — Byrna Technologies Inc. (“Byrna” or the “Company”) (Nasdaq: BYRN), a personal defense technology company specializing in the development, manufacture, and sale of innovative less-lethal personal security solutions, today reported select financial results for its fiscal fourth quarter (“Q4 2024”) and full year ended November 30, 2024.

    Fiscal Fourth Quarter 2024 and Recent Operational Highlights

    • Surpassed 500,000 launchers sold since inception, just five and a half years after the sale of Byrna’s first launcher in June 2019.
    • Increased launcher production in the first fiscal quarter of 2025 by 33% to 24,000 launchers a month to meet growing market demand and support operational growth.
    • Recently opened a new U.S.-based ammunition manufacturing facility in Fort Wayne, Indiana, as part of a re-shoring initiative, significantly expanding Byrna’s domestic production capacity and enhancing the Company’s supply chain for its payload ammunition.
    • Continued to generate a highly accretive return on ad spend (ROAS) above 5.0X through the celebrity endorsement program for the full year 2024 period, leading to a record $28.0 million of sales for the fourth quarter of 2024.
    • Added Megyn Kelly, Charlie Kirk, and Lara Trump as celebrity influencers to continue amplifying brand awareness and further support the normalization of its less-lethal solutions, while continuing to optimize marketing spend for maximum impact.
    • Partnered with the United States Concealed Carry Association (USCCA), gaining access to nearly one million USCCA members to promote less-lethal solutions while introducing Byrna customers to USCCA’s training, education, and self-defense liability insurance offerings.
    • Opened retail stores in the Greater Nashville Area, Scottsdale, Arizona, and Salem, New Hampshire. Byrna plans to open the Fort Wayne, Indiana store in the coming months.
    • Signed a Letter of Intent to launch a pilot store-within-a-store program at eleven Sportsman’s Warehouse locations, expanding Byrna’s retail footprint.

    Fiscal Fourth Quarter 2024 Financial Results
    Results compare Q4 2024 to the 2023 fiscal fourth quarter ended November 30, 2023 unless otherwise indicated.

    Net revenue for Q4 2024 was $28.0 million, compared to $15.6 million in the fiscal fourth quarter of 2023 (“Q4 2023”). The 79% year-over-year increase was primarily due to the transformational shift in Byrna’s advertising strategy implemented in September 2023 and the resulting normalization of Byrna and the less-lethal space generally.

    Gross profit for Q4 2024 was $17.6 million (63% of net revenue), up from $9.0 million (58% of net revenue) in Q4 2023. The increase in gross profit was driven by the increase in the proportion of sales made through the high-margin direct-to-consumer (DTC) channels (Byrna.com and Amazon.com), a reduction in component costs driven through an intensive cost reduction effort focused on “design for manufacturability” spearheaded by Byrna’s engineering team, and the economies of scale resulting from increased production volumes.

    Operating expenses for Q4 2024 were $13.5 million, compared to $9.7 million for Q4 2023, an increase of 39%. The increase in operating expenses was driven by an increase in variable selling costs (such as freight and third-party processing fees), increased marketing spend tied to the Company’s celebrity endorsement strategy, and higher payroll expenses in marketing and engineering as the Company has scaled to handle increased sales and production volumes.

    Net income for Q4 2024 was $9.7 million, compared to a net loss of ($0.8) million for Q4 2023, a $10.5 million improvement. This increase was driven by higher revenue and a $5.6 million income tax benefit. The tax benefit arose from the release of tax valuation allowances related to net operating loss carryforwards incurred in earlier years and other tax assets.

    Adjusted EBITDA1, a non-GAAP metric reconciled below, for Q4 2024 totaled $5.2 million, compared to $0.4 million in Q4 2023.

    Cash and cash equivalents at November 30, 2024 totaled $16.8 million compared to $20.5 million at November 30, 2023. The change in cash and cash equivalents is primarily due to an $8.9 million investment in short-term marketable securities to earn a higher yield on Byrna’s unused cash. Adding cash and short-term marketable securities, total funds available were $25.7 million, an increase of $5.2 million compared to November 30, 2023. Inventory at November 30, 2024 totaled $20.0 million compared to $13.9 million at November 30, 2023. The Company has no current or long-term debt.

    Fiscal Year 2024 Financial Results
    Results compare the 2024 fiscal year ended November 30, 2024 to the 2023 fiscal year ended November 30, 2023 unless otherwise indicated.

    Net revenue for FY 2024 was $85.8 million, a 101% increase from $42.6 million in the fiscal year ended November 30, 2023 (“FY 2023”), driven by the Company’s strategic shift in advertising, increased brand normalization, and higher DTC sales

    Gross profit for FY 2024 was $52.8 million (62% of net revenue), compared to $23.6 million (56% of net revenue) for FY 2023. The increase in gross profit margin was primarily due to a greater proportion of sales through high-margin DTC channels, lower component costs, and economies of scale.

    Operating expenses for FY 2024 were $46.1 million, compared to $31.4 million for FY 2023, reflecting a 47% increase to support growth. The increase was driven by higher variable selling costs, expanded marketing efforts, and additional personnel in marketing and engineering.

    Net income for FY 2024 was $12.8 million, compared to a net loss of ($8.2) million for FY 2023, a $21.0 million improvement. The increase in net income was driven by higher revenue and included a $5.7 million income tax benefit due to the full release of U.S. tax valuation allowances.

    Adjusted EBITDA1 for FY 2024 totaled $11.5 million, compared to a negative ($2.0) million for FY 2023. The increase in adjusted EBITDA was primarily due to an increase in revenue.

    Management Commentary
    Byrna CEO Bryan Ganz stated: “The fourth quarter was the culmination of a remarkable year for Byrna. We successfully generated a record $28.0 million in revenue while also expanding our gross margins to 62.8%. This success allowed us to deliver a 101% increase in revenue from the full year 2023 to 2024 and underscores the overall growth in brand recognition and normalization of the less-lethal space.

    “Our marketing strategy, anchored by the continued success of our celebrity influencer program, has continued to be instrumental in driving DTC sales and expanding brand awareness. For 2024, the program maintained a highly accretive return on ad spend (ROAS) above 5.0X, underscoring the effectiveness of this approach in normalizing less-lethal solutions. Building on this foundation, we have been adding a more robust, multi-channel marketing strategy that now includes traditional media such as cable and broadcast networks. This diversification complements our influencer program, which recently welcomed prominent voices like Megyn Kelly, Charlie Kirk, and Lara Trump.

    As we execute across multiple channels, we will continue to be disciplined in evaluating partnerships and optimizing ad spend to maximize impact and ROAS. We have prioritized celebrity endorsers who demonstrate strong ROAS and have discontinued partnerships that did not meet our minimum ROAS requirements. To date, the celebrity endorsers who were initially successful have continued to perform well, while those we discontinued never met our ROAS benchmarks. Unfortunately, we did lose one very successful celebrity endorser, Governor Mike Huckabee, due to his appointment as U.S. ambassador to Israel.

    “In addition to expanding our online DTC reach, we are making strides in building our brick-and-mortar footprint. With four company-owned stores up and running, we are optimistic that these stores will validate the company-owned store model and open the way to a rollout of Byrna company-owned stores in key markets throughout the United States. Given the high gross margins and the relatively inexpensive operating costs, we believe that these stores can contribute meaningfully to Byrna’s bottom line as they ramp up over the coming quarters. We are also pleased to announce that we have signed a letter of intent to partner with Sportsman’s Warehouse to launch a store-within-a-store model at 11 locations across the United States. Each of these Sportsman’s Warehouse locations will convert their existing archery range into a firing range for customers to experience our launchers, similar to our company-owned stores and premier dealers. If the initial pilot program is successful, Byrna expects to be in 90 more stores by the end of the year, accelerating the rate of our brick-and-mortar presence across the United States.

    “To ensure our production keeps pace with our growth initiatives, we have successfully increased launcher production to 24,000 units as of January at our Fort Wayne, Indiana launcher production facility. Additionally, we have begun producing payload ammunition at a new facility in Fort Wayne, located four miles from our launcher production facility. This state-of-the-art manufacturing facility will house eight advanced dousing and welding machines capable of producing both .68 and .61 caliber payload rounds for our existing launchers as well as our anticipated new Compact Launcher. We will also be able to produce .61 caliber fin-tail payload rounds for our Pepper and Max 12-gauge less-lethal rounds. Once fully operational later this year, these eight machines will collectively produce up to 10 million rounds per month, including 1.5 million fin-tail rounds for the 12-gauge platform. We believe the combination of Byrna Pepper and Max 12-gauge rounds, coupled with the Sportsman’s “store-within-a-store” partnership, will help spur the sale of our less-lethal 12-gauge rounds.

    The onshoring of ammunition production is part of Byrna’s larger ‘Made in America’ strategy. We remain committed to exiting China by mid-year and aim to source nearly 100% of the components for the Byrna SD, LE, and CL models from U.S. suppliers by the end of 2025. We expect that this transition will insulate us from any potential tariffs, create well-paying jobs for American workers, reduce lead times, and eliminate the risks associated with unreliable foreign suppliers. We expect it will also allow us to market the Byrna as ‘Made in America!’

    “Our momentum has carried into the new fiscal year with a strong holiday season in December, including $1.4 million in total product sales on Cyber Monday alone. International adoption has also been robust, particularly in Argentina, where the Cordoba Province committed to purchasing 1.7 million rounds of payload ammunition. This order, which will be shipped in 200,000-round monthly increments through the balance of 2025, reflects the extensive deployment of the 13,500 Byrna launchers purchased by the Cordoba Police Department to apprehend dangerous criminals and maintain the peace.

    “Looking ahead, we remain optimistic about our trajectory. The ongoing success of our marketing efforts has resulted in less-lethal becoming a much more widely accepted personal self-defense category. This is allowing us to advertise on an increasing number of cable and social media platforms. We believe that the market for less-lethal weapons among gun owners in the U.S. is in the tens of millions of consumers. This expanding market, along with our growing online presence, expanding retail presence, and increasing international opportunities, reinforces our confidence in the long-term demand for less-lethal weapons as a whole and for Byrna specifically. While the first quarter historically experiences a seasonal slowdown in consumer spending, we expect to achieve strong year-over-year growth as we continue executing our strategic initiatives. We believe that Byrna is well-positioned to generate additional cash and expand profitability in 2025 and beyond.”

    Conference Call
    The Company’s management will host a conference call today, February 7, 2025, at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) to discuss these results, followed by a question-and-answer period.

    Toll-Free Dial-In: 877-709-8150
    International Dial-In: +1 201-689-8354
    Confirmation: 13750859

    Please call the conference telephone number 5-10 minutes prior to the start time of the conference call. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 949-574-3860.

    The conference call will be broadcast live and available for replay here and via the Investor Relations section of Byrna’s website.

    About Byrna Technologies Inc.
    Byrna is a technology company specializing in the development, manufacture, and sale of innovative less-lethal personal security solutions. For more information on the Company, please visit the corporate website here or the Company’s investor relations site here. The Company is the manufacturer of the Byrna® SD personal security device, a state-of-the-art handheld CO2 powered launcher designed to provide a less-lethal alternative to a firearm for the consumer, private security, and law enforcement markets. To purchase Byrna products, visit the Company’s e-commerce store.

    Forward-Looking Statements
    This news release contains “forward-looking statements” within the meaning of the securities laws. All statements contained in this news release, other than statements of current and historical fact, are forward-looking. Often, but not always, forward-looking statements can be identified by the use of words such as “plans,” “expects,” “intends,” “anticipates,” and “believes” and statements that certain actions, events or results “may,” “could,” “would,” “should,” “might,” “occur,” or “be achieved,” or “will be taken.” Forward-looking statements include descriptions of currently occurring matters which may continue in the future. Forward-looking statements in this news release include but are not limited to our statements related to our expected sales during 2025, our ability to scale production lines, Byrna’s ability to remain self-sustaining, profitable and cash flow positive, Byrna’s ability to open new retail locations and realize revenue growth from them, the expected scale, timing and benefits of Byrna’s store-within-a-store partnership with Sportsman’s Warehouse, the benefits and continued success of Byrna’s celebrity endorser strategy, Byrna’s ability to re-shore production and cease purchasing parts from China on the anticipated timeline, the expected benefits of re-shoring production, the anticipated growth and potential size of the U.S. less-lethal market, and Byrna’s positioning for sustained growth in 2025 and 2026. Forward-looking statements are not, and cannot be, a guarantee of future results or events. Forward-looking statements are based on, among other things, opinions, assumptions, estimates, and analyses that, while considered reasonable by the Company at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies, and other factors that may cause actual results and events to be materially different from those expressed or implied.

    Any number of risk factors could affect our actual results and cause them to differ materially from those expressed or implied by the forward-looking statements in this news release, including, but not limited to, disappointing market responses to current or future products or services; prolonged, new, or exacerbated disruption of our supply chain; the further or prolonged disruption of new product development; production or distribution disruption or delays in entry or penetration of sales channels due to inventory constraints, competitive factors, increased transportation costs or interruptions, including due to weather, flooding or fires; prototype, parts and material shortages, particularly of parts sourced from limited or sole source providers; determinations by third party controlled distribution channels, including Amazon, not to carry or reduce inventory of the Company’s products; determinations by advertisers or social media platforms, or legislation that prevents or limits marketing of some or all Byrna products; the loss of marketing partners; increases in marketing expenditure may not yield expected revenue increases; potential cancellations of existing or future orders including as a result of any fulfillment delays, introduction of competing products, negative publicity, or other factors; product design or manufacturing defects or recalls; litigation, enforcement proceedings or other regulatory or legal developments; changes in consumer or political sentiment affecting product demand; regulatory factors including the impact of commerce and trade laws and regulations; and future restrictions on the Company’s cash resources, increased costs and other events that could potentially reduce demand for the Company’s products or result in order cancellations. The order in which these factors appear should not be construed to indicate their relative importance or priority. We caution that these factors may not be exhaustive; accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results. Investors should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A, (“Risk Factors”) in the Company’s most recent Form 10-K and Part II, Item 1A (“Risk Factors”) in the Company’s most recent Form 10-Q, should understand it is impossible to predict or identify all such factors or risks, should not consider the foregoing list, or the risks identified in the Company’s SEC filings, to be a complete discussion of all potential risks or uncertainties, and should not place undue reliance on forward-looking information. The Company assumes no obligation to update or revise any forward-looking information, except as required by applicable law.

    Investor Contact:
    Tom Colton and Alec Wilson
    Gateway Group, Inc.
    949-574-3860
    BYRN@gateway-grp.com

    -Financial Tables to Follow-

    BYRNA TECHNOLOGIES INC.
    Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
    (Amounts in thousands except share and per share data)
    (Unaudited)    		  
                       
        For the Three Months Ended   For the Twelve Months Ended  
        November 30,   November 30,  
          2024       2023       2024       2023    
    Net revenue   $ 27,979     $ 15,640     $ 85,756     $ 42,644    
    Cost of goods sold     10,417       6,596       32,984       18,997    
    Gross profit     17,561       9,044       52,772       23,647    
    Operating expenses     13,468       9,729       46,101       31,437    
    INCOME (LOSS) FROM OPERATIONS     4,094       (684 )     6,671       (7,790 )  
    OTHER INCOME (EXPENSE)                  
    Foreign currency transaction loss     (195 )     (32 )     (576 )     (270 )  
    Interest income     141       168       1,024       693    
    Loss from joint venture     –       22       (42 )     (603 )  
    Other income (expense)     1       27       7       (57 )  
    INCOME (LOSS) BEFORE INCOME TAXES     4,040       (499 )     7,084       (8,027 )  
    Income tax benefit     5,634       (330 )     5,708       165    
    NET INCOME (LOSS)   $ 9,674     $ (829 )   $ 12,792     $ (8,192 )  
                       
    Foreign currency translation adjustment for the period     (133 )     205       342       (436 )  
    Unrealized gain (loss) on marketable securities     65       –       65       –    
    COMPREHENSIVE INCOME (LOSS)   $ 9,606     $ (624 )   $ 13,199     $ (8,628 )  
                       
    Basic net income (loss) per share   $ 0.43     $ (0.04 )   $ 0.57     $ (0.37 )  
    Diluted net income (loss) per share   $ 0.41     $ (0.04 )   $ 0.55     $ (0.37 )  
                       
    Weighted-average number of common shares outstanding – basic     22,514,644       21,991,313       22,504,938       21,919,624    
    Weighted-average number of common shares outstanding – diluted     23,754,328       21,991,313       23,139,549       21,919,624    
                       
    BYRNA TECHNOLOGIES INC.
    Condensed Consolidated Balance Sheets
    (Amounts in thousands, except share and per share data)
               
        November 30,  
          2024       2023    
    ASSETS          
    CURRENT ASSETS          
    Cash and cash equivalents   $ 16,829     $ 20,498    
    Accounts receivable, net     2,630       2,945    
    Marketable Securities     8,904       —    
    Inventory, net     19,972       13,890    
    Prepaid expenses and other current assets     2,623       868    
    Total current assets     50,958       38,201    
               
    Deposits for equipment     2,665       1,163    
    Right-of-use-asset, net     2,452       1,805    
    Property and equipment, net     3,408       3,803    
    Intangible assets, net     3,337       3,583    
    Goodwill     2,258       2,258    
    Loan to joint venture   —     1,473    
    Deferred tax asset     5,837        
    Other assets     1,007       28    
    TOTAL ASSETS   $ 71,922     $ 52,314    
    LIABILITIES          
    CURRENT LIABILITIES          
    Accounts payable and accrued liabilities   $ 13,108     $ 6,158    
    Operating lease liabilities, current     539       644    
    Deferred revenue     1,791       1,844    
    Line of credit     —       —    
    Notes payable, current     —       —    
    Total current liabilities     15,438       8,646    
               
    Notes payable, non-current          
    Deferred revenue, non-current     17       91    
    Operating lease liabilities, non-current     2,098       1,258    
    Total Liabilities     17,553       9,995    
               
    COMMITMENTS AND CONTINGENCIES (NOTE 19)          
               
    Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued     —       —    
    Common stock, $0.001 par value, 50,000,000 shares authorized. 24,168,014 shares
    issued and 22,002,027 outstanding as of November 30, 2024 and, 24,018,612 shares issued and 21,852,625
    outstanding as of November 30, 2023    		     24       24    
    Additional paid-in capital     133,030       130,426    
    Treasury stock (2,165,987 shares purchased as of November 30, 2024 and 2023)     (21,253 )     (17,500 )  
    Accumulated deficit     (56,783 )     (69,575 )  
    Accumulated other comprehensive loss     (649 )     (1,056 )  
               
    Total Stockholders’ Equity     54,369       42,319    
               
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 71,922     $ 52,314    
               

    Non-GAAP Financial Measures

    In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide an additional financial metric that is not prepared in accordance with GAAP (non-GAAP) with presenting non-GAAP adjusted EBITDA. Management uses this non-GAAP financial measure, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance. We believe that this non-GAAP financial measure helps us to identify underlying trends in our business that could otherwise be masked by the effect of certain expenses that we exclude in the calculations of the non-GAAP financial measure.

    Accordingly, we believe that this non-GAAP financial measure reflects our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business and provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.

    This non-GAAP financial measure does not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP. There are limitations in the use of non-GAAP measures, because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment concerning exclusions of items from the comparable non-GAAP financial measure. In addition, other companies may use other non-GAAP measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measure as a tool for comparison.         

    Adjusted EBITDA

    Adjusted EBITDA is defined as net (loss) income as reported in our condensed consolidated statements of operations and comprehensive (loss) income excluding the impact of (I) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest income (expense); (iv) stock-based compensation expense, (v) impairment loss, and (vi) one time, non-recurring other expenses or income. Our Adjusted EBITDA measure eliminates potential differences in performance caused by variations in capital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense). We also exclude certain one-time and non-cash costs. Reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable GAAP measure, is as follows (in thousands):

          For the Three Months Ended   For the Twelve Months Ended  
          November 30,   November 30,  
            2024       2023       2024       2023    
    Net Income (Loss)   $ 9,673     $ (829 )   $ 12,792     $ (8,192 )  
                         
    Adjustments:                  
      Interest income     (141 )     (168 )     (1,024 )     (693 )  
      Income tax benefit     (5,634 )     330       (5,708 )     165    
      Depreciation and amortization     378       341       1,491       1,262    
    Non-GAAP EBITDA   $ 4,276     $ (326 )   $ 7,551     $ (7,458 )  
                         
    Stock-based compensation expense     788       686       3,403       5,375    
    Severance/Separation/Officer recruiting     93       30       524       82    
    Non-GAAP adjusted EBITDA   $ 5,157     $ 390     $ 11,478     $ (2,001 )  
                         

    1 See non-GAAP financial measures at the end of this press release for a reconciliation and a discussion of non-GAAP financial measures.

    The MIL Network –

  • MIL-OSI: Plains All American Reports Fourth-Quarter and Full-Year 2024 Results; Provides Update on Efficient Growth Initiatives and Announces 2025 Guidance

    Source: GlobeNewswire (MIL-OSI)

    HOUSTON, Feb. 07, 2025 (GLOBE NEWSWIRE) — Plains All American Pipeline, L.P. (Nasdaq: PAA) and Plains GP Holdings (Nasdaq: PAGP) today reported fourth-quarter and full-year 2024 results, announced 2025 guidance and provided the following highlights:

    2024 Results

    • Fourth-quarter and full-year 2024 Net income attributable to PAA of $36 million and $772 million, respectively, and 2024 Net cash provided by operating activities of $726 million and $2.49 billion, respectively
    • Delivered strong fourth-quarter and full-year 2024 Adjusted EBITDA attributable to PAA above the top-end of guidance with $729 million and $2.78 billion, respectively
    • Generated full-year 2024 Adjusted Free Cash Flow (excluding changes in Assets & Liabilities; including impact from legal settlements) of $1.17 billion and exited the year with leverage at 3.0x
    • Net income for the quarter includes the impact of a $225 million charge resulting from the write-off of a receivable for Line 901 insurance proceeds and $140 million of non-cash charges related to the write-down of two U.S. NGL terminals

    Efficient Growth Initiatives

    • Closed all three previously announced bolt-on acquisitions for approximately $670 million net to PAA, including the acquisition of Ironwood Midstream Energy
    • Closed on previously announced purchase of approximately 12.7 million units, or 18%, of its Series A Preferred Units for a purchase price of approximately $330 million
    • Continue pursuing a long runway of synergistic and strong return bolt-on opportunities across the asset footprint

    2025 Outlook

    • Expect full-year 2025 Adjusted EBITDA attributable to PAA of $2.80 – $2.95 billion
    • Announced distribution increase of $0.25 per unit payable February 14, 2025, representing a 20% aggregate increase in the annualized distribution versus 2024 levels (new annual distribution of $1.52 per unit)
    • In January, successfully raised $1 billion in aggregate senior unsecured notes at 5.95% due 2035
    • Anticipate leverage ratio to be at or below the low-end of leverage target range of 3.25x to 3.75x, continuing to provide significant balance sheet optionality and flexibility
    • Expect to generate approximately $1.15 billion of Adjusted Free Cash Flow (excluding changes in Assets & Liabilities), which is reduced by approximately $580 million for previously announced bolt-on transactions closed in the first quarter
    • Remain focused on disciplined capital investments, anticipating full-year 2025 Growth Capital of +/- $400 million and Maintenance Capital of +/- $240 million net to PAA

    “We continue delivering strong financial and operating results and increasing return of capital to unitholders. As evidenced by our recently announced acquisitions, we have the ability to leverage our integrated asset base and financial strength to drive accretive transactions and deliver value to our customers and unitholders,” said Plains Chairman and CEO Willie Chiang. “We remain confident entering 2025, with strong operational momentum and focus on executing our efficient growth strategy. Our strong performance and positive outlook combined with the contribution from recent bolt-on acquisitions continues driving meaningful cash flow and underpins increasing returns to unitholders all while maintaining capital discipline and financial flexibility.”

    Plains All American Pipeline

    Summary Financial Information (unaudited)
    (in millions, except per unit data)

        Three Months Ended
    December 31,    		   %     Twelve Months Ended
    December 31,    		   %
    GAAP Results   2024   2023
    		   Change     2024
    		   2023
    		   Change
    Net income attributable to PAA   $ 36     $ 312       (88 )%     $ 772     $ 1,230       (37 )%
    Diluted net income/(loss) per common unit   $ (0.04 )   $ 0.35       (111 )%     $ 0.73     $ 1.40       (48 )%
    Diluted weighted average common units outstanding     704       701       — %       702       699       — %
    Net cash provided by operating activities   $ 726     $ 1,011       (28 )%     $ 2,490     $ 2,727       (9 )%
    Distribution per common unit declared for the period   $ 0.3800     $ 0.3175       20 %     $ 1.3325     $ 1.1200       19 %
                                                       
        Three Months Ended
    December 31,    		   %     Twelve Months Ended
    December 31,    		   %
    Non-GAAP Results (1)   2024   2023
    		   Change     2024
    		   2023
    		   Change
    Adjusted net income attributable to PAA   $ 357     $ 355       1 %     $ 1,318     $ 1,250       5 %
    Diluted adjusted net income per common unit   $ 0.42     $ 0.42       — %     $ 1.51     $ 1.42       6 %
    Adjusted EBITDA   $ 867     $ 875       (1 )%     $ 3,326     $ 3,167       5 %
    Adjusted EBITDA attributable to PAA (2)   $ 729     $ 737       (1 )%     $ 2,779     $ 2,711       3 %
    Implied DCF per common unit and common unit equivalent   $ 0.64     $ 0.68       (6 )%     $ 2.49     $ 2.46       1 %
    Adjusted Free Cash Flow   $ 365     $ 710     **     $ 1,247     $ 1,798       (31 )%
    Adjusted Free Cash Flow after Distributions   $ 79     $ 458     **     $ 102     $ 809       (87 )%
    Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) (3)   $ 134     $ 402       **     $ 1,173     $ 1,604       (27 )%
    Adjusted Free Cash Flow after Distributions (Excluding Changes in Assets & Liabilities) (3)   $ (152 )   $ 150     **     $ 28     $ 615       (95 )%
         
    ** Indicates that variance as a percentage is not meaningful.
    (1) See the section of this release entitled “Non-GAAP Financial Measures and Selected Items Impacting Comparability” and the tables attached hereto for information regarding our Non-GAAP financial measures, including their reconciliation to the most directly comparable measures as reported in accordance with GAAP, and certain selected items that PAA believes impact comparability of financial results between reporting periods.
    (2) Excludes amounts attributable to noncontrolling interests in the Plains Oryx Permian Basin LLC joint venture, Cactus II Pipeline LLC and Red River Pipeline LLC.
    (3) Fourth-quarter and full-year 2024 Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) includes the negative impact of a $225 million charge resulting from the write-off of a receivable for Line 901 insurance proceeds.
         

    Summary of Selected Financial Data by Segment (unaudited)
    (in millions)

      Segment Adjusted EBITDA
      Crude Oil   NGL
    Three Months Ended December 31, 2024 $ 569     $ 154  
    Three Months Ended December 31, 2023 $ 563     $ 169  
    Percentage change in Segment Adjusted EBITDA versus 2023 period 1 %   (9 )%
               
      Segment Adjusted EBITDA
      Crude Oil   NGL
    Twelve Months Ended December 31, 2024 $ 2,276     $ 480  
    Twelve Months Ended December 31, 2023 $ 2,163     $ 522  
    Percentage change in Segment Adjusted EBITDA versus 2023 period 5 %   (8 )%
               

    Fourth-quarter 2024 Crude Oil Segment Adjusted EBITDA increased 1% versus comparable 2023 results primarily due to higher tariff volumes on our pipelines, tariff escalations and contributions from acquisitions. These items were partially offset by fewer market-based opportunities, as well as an increase in estimated costs for long-term environmental remediation obligations.

    Fourth-quarter 2024 NGL Segment Adjusted EBITDA decreased 9% versus comparable 2023 results primarily due to lower weighted average frac spreads in the fourth quarter of 2024.

    Plains GP Holdings

    PAGP owns an indirect non-economic controlling interest in PAA’s general partner and an indirect limited partner interest in PAA. As the control entity of PAA, PAGP consolidates PAA’s results into its financial statements, which is reflected in the condensed consolidating balance sheet and income statement tables attached hereto.

    Conference Call and Webcast Instructions

    PAA and PAGP will hold a joint conference call at 9:00 a.m. CT on Friday, February 7, 2025 to discuss fourth-quarter performance and related items.

    To access the internet webcast, please go to https://edge.media-server.com/mmc/p/xp2zqt6q/.

    Alternatively, the webcast can be accessed on our website at https://ir.plains.com/news-events/events-presentations. Following the live webcast, an audio replay will be available on our website and will be accessible for a period of 365 days. Slides will be posted prior to the call at the above referenced website.

    Non-GAAP Financial Measures and Selected Items Impacting Comparability

    To supplement our financial information presented in accordance with GAAP, management uses additional measures known as “non-GAAP financial measures” in its evaluation of past performance and prospects for the future and to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. The primary additional measures used by management are Adjusted EBITDA, Adjusted EBITDA attributable to PAA, Implied Distributable Cash Flow (“DCF”), Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions.

    Our definition and calculation of certain non-GAAP financial measures may not be comparable to similarly-titled measures of other companies. Adjusted EBITDA, Adjusted EBITDA attributable to PAA, Implied DCF and certain other non-GAAP financial performance measures are reconciled to Net Income, and Adjusted Free Cash Flow, Adjusted Free Cash Flow after Distributions and certain other non-GAAP financial liquidity measures are reconciled to Net Cash Provided by Operating Activities (the most directly comparable measures as reported in accordance with GAAP) for the historical periods presented in the tables attached to this release, and should be viewed in addition to, and not in lieu of, our Consolidated Financial Statements and accompanying notes. In addition, we encourage you to visit our website at www.plains.com (in particular the section under “Financial Information” entitled “Non-GAAP Reconciliations” within the Investor Relations tab), which presents a reconciliation of our commonly used non-GAAP and supplemental financial measures. We do not reconcile non-GAAP financial measures on a forward-looking basis as it is impractical to do so without unreasonable effort.

    Non-GAAP Financial Performance Measures

    Adjusted EBITDA is defined as earnings before (i) interest expense, (ii) income tax (expense)/benefit, (iii) depreciation and amortization (including our proportionate share of depreciation and amortization, including write-downs related to cancelled projects and impairments, of unconsolidated entities), (iv) gains and losses on asset sales, asset impairments and other, net, (v) gains and losses on investments in unconsolidated entities and (vi) interest income on promissory notes by and among PAA and certain Plains entities, and (vii) adjusted for certain selected items impacting comparability. Adjusted EBITDA attributable to PAA excludes the portion of Adjusted EBITDA that is attributable to noncontrolling interests.

    Management believes that the presentation of Adjusted EBITDA, Adjusted EBITDA attributable to PAA and Implied DCF provides useful information to investors regarding our performance and results of operations because these measures, when used to supplement related GAAP financial measures, (i) provide additional information about our core operating performance and ability to fund distributions to our unitholders through cash generated by our operations and (ii) provide investors with the same financial analytical framework upon which management bases financial, operational, compensation and planning/budgeting decisions. We also present these and additional non-GAAP financial measures, including adjusted net income attributable to PAA and basic and diluted adjusted net income per common unit, as they are measures that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These non-GAAP financial performance measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) gains and losses on derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are either related to investing activities (such as the purchase of linefill) or purchases of long-term inventory, and inventory valuation adjustments, as applicable, (iii) long-term inventory costing adjustments, (iv) items that are not indicative of our core operating results and/or (v) other items that we believe should be excluded in understanding our core operating performance. These measures may be further adjusted to include amounts related to deficiencies associated with minimum volume commitments whereby we have billed the counterparties for their deficiency obligation and such amounts are recognized as deferred revenue in “Other current liabilities” in our Consolidated Financial Statements. We also adjust for amounts billed by our equity method investees related to deficiencies under minimum volume commitments. Such amounts are presented net of applicable amounts subsequently recognized into revenue. Furthermore, the calculation of these measures contemplates tax effects as a separate reconciling item, where applicable. We have defined all such items as “selected items impacting comparability.” Due to the nature of the selected items, certain selected items impacting comparability may impact certain non-GAAP financial measures, referred to as adjusted results, but not impact other non-GAAP financial measures. We do not necessarily consider all of our selected items impacting comparability to be non-recurring, infrequent or unusual, but we believe that an understanding of these selected items impacting comparability is material to the evaluation of our operating results and prospects.

    Although we present selected items impacting comparability that management considers in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions, divestitures, investment capital projects and numerous other factors. These types of variations may not be separately identified in this release, but will be discussed, as applicable, in management’s discussion and analysis of operating results in our Annual Report on Form 10-K.

    Non-GAAP Financial Liquidity Measures

    Management uses the non-GAAP financial liquidity measures Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. Adjusted Free Cash Flow is defined as Net Cash Provided by Operating Activities, less Net Cash Provided by/(Used in) Investing Activities, which primarily includes acquisition, investment and maintenance capital expenditures, investments in unconsolidated entities and the impact from the purchase and sale of linefill, net of proceeds from the sales of assets and further impacted by distributions to and contributions from noncontrolling interests and proceeds from the issuance of related party notes. Adjusted Free Cash Flow is further reduced by cash distributions paid to our preferred and common unitholders to arrive at Adjusted Free Cash Flow after Distributions.

    We also present these measures and additional non-GAAP financial liquidity measures as they are measures that investors have indicated are useful. We present the Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) for use in assessing our underlying business liquidity and cash flow generating capacity excluding fluctuations caused by timing of when amounts earned or incurred were collected, received or paid from period to period. Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) is defined as Adjusted Free Cash Flow excluding the impact of “Changes in assets and liabilities, net of acquisitions” on our Condensed Consolidated Statements of Cash Flows. Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) is further reduced by cash distributions paid to our preferred and common unitholders to arrive at Adjusted Free Cash Flow after Distributions (Excluding Changes in Assets & Liabilities).

           
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (in millions, except per unit data)
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023   2024   2023
    REVENUES $ 12,402     $ 12,698     $ 50,073     $ 48,712  
                   
    COSTS AND EXPENSES              
    Purchases and related costs   11,227       11,558       45,560       44,531  
    Field operating costs (1)   578       363       1,768       1,425  
    General and administrative expenses   93       87       381       350  
    Depreciation and amortization   258       273       1,026       1,048  
    (Gains)/losses on asset sales, asset impairments and other, net   159       (9 )     160       (152 )
    Total costs and expenses   12,315       12,272       48,895       47,202  
                   
    OPERATING INCOME   87       426       1,178       1,510  
                   
    OTHER INCOME/(EXPENSE)              
    Equity earnings in unconsolidated entities   154       92       452       369  
    Gain on investments in unconsolidated entities, net   15       —       15       28  
    Interest expense, net (2)   (112 )     (97 )     (430 )     (386 )
    Other income, net (2)   20       17       65       102  
                   
    INCOME BEFORE TAX   164       438       1,280       1,623  
    Current income tax expense (3)   (52 )     (41 )     (195 )     (145 )
    Deferred income tax benefit   7       2       28       24  
                   
    NET INCOME   119       399       1,113       1,502  
    Net income attributable to noncontrolling interests   (83 )     (87 )     (341 )     (272 )
    NET INCOME ATTRIBUTABLE TO PAA $ 36     $ 312     $ 772     $ 1,230  
                   
    NET INCOME/(LOSS) PER COMMON UNIT:              
    Net income/(loss) allocated to common unitholders — Basic and Diluted $ (27 )   $ 248     $ 514     $ 976  
    Basic and diluted weighted average common units outstanding   704       701       702       699  
    Basic and diluted net income/(loss) per common unit $ (0.04 )   $ 0.35     $ 0.73     $ 1.40  
         
    (1) Field operating costs include $225 million and $345 million for the three and twelve months ended December 31, 2024, respectively, resulting from adjustments related to the Line 901 incident that occurred in May 2015, including the write-off of a receivable for Line 901 insurance proceeds in the fourth quarter of 2024 and settlements in the third quarter of 2024.
    (2) PAA and certain Plains entities have issued promissory notes by and among such entities to facilitate financing. “Interest expense, net” and “Other income, net” each include $17 million and $48 million for the three and twelve months ended December 31, 2024, respectively, related to interest on such notes. These amounts offset and do not impact Net Income or Non-GAAP metrics such as Adjusted EBITDA, Implied DCF and Adjusted Free Cash Flow.
    (3) The increase in current income tax expense for the 2024 periods was largely associated with Canadian withholding tax on dividends from our Canadian entities to other Plains entities driven by timing of dividend payments.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    CONDENSED CONSOLIDATED BALANCE SHEET DATA
    (in millions)
           
      December 31,
    2024    		   December 31,
    2023
    ASSETS      
    Current assets (including Cash and cash equivalents of $348 and $450, respectively) $ 4,802     $ 4,913  
    Property and equipment, net   15,424       15,782  
    Investments in unconsolidated entities   2,811       2,820  
    Intangible assets, net   1,677       1,875  
    Linefill   968       976  
    Long-term operating lease right-of-use assets, net   332       313  
    Long-term inventory   280       265  
    Other long-term assets, net   268       411  
    Total assets $ 26,562     $ 27,355  
           
    LIABILITIES AND PARTNERS’ CAPITAL      
    Current liabilities $ 4,950     $ 5,003  
    Senior notes, net   7,141       7,242  
    Other long-term debt, net   72       63  
    Long-term operating lease liabilities   313       274  
    Other long-term liabilities and deferred credits   990       1,041  
    Total liabilities   13,466       13,623  
           
    Partners’ capital excluding noncontrolling interests   9,813       10,422  
    Noncontrolling interests   3,283       3,310  
    Total partners’ capital   13,096       13,732  
    Total liabilities and partners’ capital $ 26,562     $ 27,355  
                   

    DEBT CAPITALIZATION RATIOS
    (in millions)

      December 31,
    2024    		   December 31,
    2023
    Short-term debt $ 408     $ 446  
    Long-term debt   7,213       7,305  
    Total debt $ 7,621     $ 7,751  
           
    Long-term debt $ 7,213     $ 7,305  
    Partners’ capital excluding noncontrolling interests   9,813       10,422  
    Total book capitalization excluding noncontrolling interests (“Total book capitalization”) $ 17,026     $ 17,727  
    Total book capitalization, including short-term debt $ 17,434     $ 18,173  
           
    Long-term debt-to-total book capitalization   42 %     41 %
    Total debt-to-total book capitalization, including short-term debt   44 %     43 %
                   
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    COMPUTATION OF BASIC AND DILUTED NET INCOME/(LOSS) PER COMMON UNIT (1)
    (in millions, except per unit data)
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023   2024   2023
    Basic and Diluted Net Income/(Loss) per Common Unit              
    Net income attributable to PAA $ 36     $ 312     $ 772     $ 1,230  
    Distributions to Series A preferred unitholders   (44 )     (44 )     (175 )     (173 )
    Distributions to Series B preferred unitholders   (19 )     (20 )     (78 )     (76 )
    Amounts allocated to participating securities   (1 )     (1 )     (10 )     (10 )
    Other   1       1       5       5  
    Net income/(loss) allocated to common unitholders $ (27 )   $ 248     $ 514     $ 976  
                   
    Basic and diluted weighted average common units outstanding (2) (3)   704       701       702       699  
                   
    Basic and diluted net income/(loss) per common unit $ (0.04 )   $ 0.35     $ 0.73     $ 1.40  
         
    (1) We calculate net income/(loss) allocated to common unitholders based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to common unitholders and participating securities in accordance with the contractual terms of our partnership agreement in effect for the period and as further prescribed under the two-class method.
    (2) The possible conversion of our Series A preferred units was excluded from the calculation of diluted net income/(loss) per common unit for each of the three and twelve months ended December 31, 2024 and 2023 as the effect was antidilutive.
    (3) Our equity-indexed compensation plan awards that contemplate the issuance of common units are considered potentially dilutive unless (i) they become vested only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. Equity-indexed compensation plan awards that are deemed to be dilutive are reduced by a hypothetical common unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    CONDENSED CONSOLIDATED CASH FLOW DATA
    (in millions)
       
      Twelve Months Ended
    December 31, 2024
      2024   2023
    CASH FLOWS FROM OPERATING ACTIVITIES      
    Net income $ 1,113     $ 1,502  
    Reconciliation of net income to net cash provided by operating activities:      
    Depreciation and amortization   1,026       1,048  
    (Gains)/losses on asset sales, asset impairments and other, net   160       (152 )
    Deferred income tax benefit   (28 )     (24 )
    Change in fair value of Preferred Distribution Rate Reset Option   —       (58 )
    Equity earnings in unconsolidated entities   (452 )     (369 )
    Distributions on earnings from unconsolidated entities   505       458  
    Gain on investments in unconsolidated entities, net   (15 )     (28 )
    Other   107       156  
    Changes in assets and liabilities, net of acquisitions   74       194  
    Net cash provided by operating activities   2,490       2,727  
           
    CASH FLOWS FROM INVESTING ACTIVITIES      
    Net cash used in investing activities (1)   (1,504 )     (702 )
           
    CASH FLOWS FROM FINANCING ACTIVITIES      
    Net cash used in financing activities (1)   (1,077 )     (1,976 )
           
    Effect of translation adjustment   (11 )     —  
           
    Net increase/(decrease) in cash and cash equivalents and restricted cash   (102 )     49  
           
    Cash and cash equivalents and restricted cash, beginning of period   450       401  
    Cash and cash equivalents and restricted cash, end of period $ 348     $ 450  
         
    (1)  PAA and certain Plains entities have issued promissory notes by and among such entities to facilitate financing. For the twelve months ended December 31, 2024, “Net cash used in investing activities” includes a cash outflow of $629 million associated with our investment in related party notes. An equal and offsetting cash inflow associated with our issuance of related party notes is included in “Net cash used in financing activities.”
         

    CAPITAL EXPENDITURES
    (in millions)

      Net to PAA (1)   Consolidated
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,    		   Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024
    		   2023
    		   2024
    		   2023
    		   2024
    		   2023
    		   2024
    		   2023
    Investment capital expenditures:                              
    Crude Oil $ 55     $ 75     $ 214     $ 245     $ 80     $ 100     $ 300     $ 334  
    NGL   41       14       115       65       41       14       115       65  
    Total Investment capital expenditures   96       89       329       310       121       114       415       399  
    Maintenance capital expenditures   68       58       242       214       73       63       261       231  
      $ 164     $ 147     $ 571     $ 524     $ 194     $ 177     $ 676     $ 630  
         
    (1)  Excludes expenditures attributable to noncontrolling interests.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    NON-GAAP RECONCILIATIONS
    (in millions, except per unit and ratio data)
           
    Computation of Basic and Diluted Adjusted Net Income Per Common Unit (1):
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023   2024   2023
    Basic and Diluted Adjusted Net Income per Common Unit              
    Net income attributable to PAA $ 36     $ 312     $ 772     $ 1,230  
    Selected items impacting comparability – Adjusted net income attributable to PAA (2)   321       43       546       20  
    Adjusted net income attributable to PAA $ 357     $ 355     $ 1,318     $ 1,250  
    Distributions to Series A preferred unitholders   (44 )     (44 )     (175 )     (173 )
    Distributions to Series B preferred unitholders   (19 )     (20 )     (78 )     (76 )
    Amounts allocated to participating securities   (1 )     (1 )     (11 )     (10 )
    Other   1       1       5       5  
    Adjusted net income allocated to common unitholders $ 294     $ 291     $ 1,059     $ 996  
                   
    Basic and diluted weighted average common units outstanding (3) (4)   704       701       702       699  
                   
    Basic and diluted adjusted net income per common unit $ 0.42     $ 0.42     $ 1.51     $ 1.42  
         
    (1) We calculate adjusted net income allocated to common unitholders based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the common unitholders and participating securities in accordance with the contractual terms of our partnership agreement in effect for the period and as further prescribed under the two-class method.
    (2) See the “Selected Items Impacting Comparability” table for additional information.
    (3) The possible conversion of our Series A preferred units was excluded from the calculation of diluted adjusted net income per common unit for each of the three and twelve months ended December 31, 2024 and 2023 as the effect was antidilutive.
    (4) Our equity-indexed compensation plan awards that contemplate the issuance of common units are considered potentially dilutive unless (i) they become vested only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. Equity-indexed compensation plan awards that are deemed to be dilutive are reduced by a hypothetical common unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB.
         

    Net Income/(Loss) Per Common Unit to Adjusted Net Income Per Common Unit Reconciliation:

      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023
    		   2024
    		   2023
    Basic and diluted net income/(loss) per common unit $ (0.04 )   $ 0.35     $ 0.73     $ 1.40  
    Selected items impacting comparability per common unit (1)   0.46       0.07       0.78       0.02  
    Basic and diluted adjusted net income per common unit $ 0.42     $ 0.42     $ 1.51     $ 1.42  
         
    (1)  See the “Selected Items Impacting Comparability” and the “Computation of Basic and Diluted Adjusted Net Income/(Loss) Per Common Unit” tables for additional information.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    Net Income to Adjusted EBITDA attributable to PAA and Implied DCF Reconciliation:
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023   2024   2023
    Net Income $ 119     $ 399     $ 1,113     $ 1,502  
    Interest expense, net of certain items (1)   95       97       382       386  
    Income tax expense   45       39       167       121  
    Depreciation and amortization   258       273       1,026       1,048  
    (Gains)/losses on asset sales, asset impairments and other, net   159       (9 )     160       (152 )
    Gain on investments in unconsolidated entities, net   (15 )     —       (15 )     (28 )
    Depreciation and amortization of unconsolidated entities (2)   26       20       84       87  
    Selected items impacting comparability – Adjusted EBITDA (3)   180       56       409       203  
    Adjusted EBITDA $ 867     $ 875     $ 3,326     $ 3,167  
    Adjusted EBITDA attributable to noncontrolling interests   (138 )     (138 )     (547 )     (456 )
    Adjusted EBITDA attributable to PAA $ 729     $ 737     $ 2,779     $ 2,711  
                   
    Adjusted EBITDA $ 867     $ 875     $ 3,326     $ 3,167  
    Interest expense, net of certain non-cash items (4)   (92 )     (92 )     (365 )     (367 )
    Maintenance capital   (73 )     (63 )     (261 )     (231 )
    Investment capital of noncontrolling interests (5)   (24 )     (24 )     (86 )     (87 )
    Current income tax expense   (52 )     (41 )     (195 )     (145 )
    Distributions from unconsolidated entities in excess of/(less than) adjusted equity earnings (6)   —       (15 )     11       (37 )
    Distributions to noncontrolling interests (7)   (114 )     (97 )     (425 )     (333 )
    Implied DCF $ 512     $ 543     $ 2,005     $ 1,967  
    Preferred unit cash distributions paid (7)   (63 )     (64 )     (254 )     (241 )
    Implied DCF Available to Common Unitholders $ 449     $ 479     $ 1,751     $ 1,726  
                   
    Weighted Average Common Units Outstanding   704       701       702       699  
    Weighted Average Common Units and Common Unit Equivalents   775       772       773       770  
                   
    Implied DCF per Common Unit (8) $ 0.64     $ 0.68     $ 2.49     $ 2.47  
    Implied DCF per Common Unit and Common Unit Equivalent (9) $ 0.64     $ 0.68     $ 2.49     $ 2.46  
                   
    Cash Distribution Paid per Common Unit $ 0.3175     $ 0.2675     $ 1.2700     $ 1.0700  
    Common Unit Cash Distributions (7) $ 223     $ 188     $ 891     $ 748  
    Common Unit Distribution Coverage Ratio 2.01x   2.55x   1.97x   2.31x
                   
    Implied DCF Excess $ 226     $ 291     $ 860     $ 978  
         
    (1)  Represents “Interest expense, net” as reported on our Condensed Consolidated Statements of Operations, net of interest income associated with promissory notes by and among PAA and certain Plains entities.
    (2) Adjustment to exclude our proportionate share of depreciation and amortization expense (including write-downs related to cancelled projects and impairments) of unconsolidated entities.
    (3) See the “Selected Items Impacting Comparability” table for additional information.
    (4) Amount excludes certain non-cash items impacting interest expense such as amortization of debt issuance costs and terminated interest rate swaps.
    (5) Investment capital expenditures attributable to noncontrolling interests that reduce Implied DCF available to PAA common unitholders.
    (6)  Comprised of cash distributions received from unconsolidated entities less equity earnings in unconsolidated entities (adjusted for our proportionate share of depreciation and amortization, including write-downs related to cancelled projects and impairments, and selected items impacting comparability of unconsolidated entities).
    (7) Cash distributions paid during the period presented.
    (8) Implied DCF Available to Common Unitholders for the period divided by the weighted average common units outstanding for the period.
    (9) Implied DCF Available to Common Unitholders for the period, adjusted for Series A preferred unit cash distributions paid, divided by the weighted average common units and common unit equivalents outstanding for the period. Our Series A preferred units are convertible into common units, generally on a one-for-one basis and subject to customary anti-dilution adjustments, in whole or in part, subject to certain minimum conversion amounts.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    Net Income Per Common Unit to Implied DCF Per Common Unit and Common Unit Equivalent Reconciliation:
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023
    		   2024
    		   2023
    Basic net income/(loss) per common unit $ (0.04 )   $ 0.35     $ 0.73     $ 1.40  
    Reconciling items per common unit (1) (2)   0.68       0.33       1.76       1.07  
    Implied DCF per common unit $ 0.64     $ 0.68     $ 2.49     $ 2.47  
                   
    Basic net income/(loss) per common unit $ (0.04 )   $ 0.35     $ 0.73     $ 1.40  
    Reconciling items per common unit and common unit equivalent (1) (3)   0.68       0.33       1.76       1.06  
    Implied DCF per common unit and common unit equivalent $ 0.64     $ 0.68     $ 2.49     $ 2.46  
         
    (1) Represents adjustments to Net Income to calculate Implied DCF Available to Common Unitholders. See the “Net Income to Adjusted EBITDA attributable to PAA and Implied DCF Reconciliation” table for additional information.
    (2) Based on weighted average common units outstanding for the period of 704 million, 701 million, 702 million and 699 million, respectively.
    (3) Based on weighted average common units outstanding for the period, as well as weighted average Series A preferred units outstanding of 71 million for each of the periods presented.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    Net Cash Provided by Operating Activities to Non-GAAP Financial Liquidity Measures Reconciliation:
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023   2024   2023
    Net cash provided by operating activities $ 726     $ 1,011     $ 2,490     $ 2,727  
    Adjustments to reconcile Net cash provided by operating activities to Adjusted Free Cash Flow:              
    Net cash used in investing activities (1)   (264 )     (257 )     (1,504 )     (702 )
    Cash contributions from noncontrolling interests   17       53       57       106  
    Cash distributions paid to noncontrolling interests (2)   (114 )     (97 )     (425 )     (333 )
    Proceeds from the issuance of related party notes (1)   —       —       629       —  
    Adjusted Free Cash Flow (3) $ 365     $ 710     $ 1,247     $ 1,798  
    Cash distributions (4)   (286 )     (252 )     (1,145 )     (989 )
    Adjusted Free Cash Flow after Distributions (3)(5) $ 79     $ 458     $ 102     $ 809  
                   
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023   2024   2023
    Adjusted Free Cash Flow (3) $ 365     $ 710     $ 1,247     $ 1,798  
    Changes in assets and liabilities, net of acquisitions (6)   (231 )     (308 )     (74 )     (194 )
    Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) (7)(8) $ 134     $ 402     $ 1,173     $ 1,604  
    Cash distributions (4)   (286 )     (252 )     (1,145 )     (989 )
    Adjusted Free Cash Flow after Distributions (Excluding Changes in Assets & Liabilities) (7)(8) $ (152 )   $ 150     $ 28     $ 615  
         
    (1)  PAA and certain Plains entities have issued promissory notes by and among such entities to facilitate financing. “Proceeds from the issuance of related party notes” has an equal and offsetting cash outflow associated with our investment in related party notes, which is included as a component of “Net cash used in investing activities.”
    (2)  Cash distributions paid during the period presented.
    (3)  Management uses the non-GAAP financial liquidity measures Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. Adjusted Free Cash Flow after Distributions shortages, if any, may be funded from previously established reserves, cash on hand or from borrowings under our credit facilities or commercial paper program.
    (4)  Cash distributions paid to preferred and common unitholders during the period.
    (5)  Excess Adjusted Free Cash Flow after Distributions is retained to establish reserves for future distributions, capital expenditures, debt reduction and other partnership purposes. Adjusted Free Cash Flow after Distributions shortages may be funded from previously established reserves, cash on hand or from borrowings under our credit facilities or commercial paper program.
    (6)  See the “Condensed Consolidated Cash Flow Data” table.
    (7)   Management uses the non-GAAP financial liquidity measures Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) and Adjusted Free Cash Flow after Distributions (Excluding Changes in Assets & Liabilities) to assess the underlying business liquidity and cash flow generating capacity excluding fluctuations caused by timing of when amounts earned or incurred were collected, received or paid from period to period.
    (8)  Fourth-quarter and full-year 2024 Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities) includes the negative impact of a $225 million charge resulting from the write-off of a receivable for Line 901 insurance proceeds.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    SELECTED ITEMS IMPACTING COMPARABILITY
    (in millions)
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023   2024   2023
    Selected Items Impacting Comparability: (1)              
    Derivative activities and inventory valuation adjustments (2) $ (6 )   $ 43     $ (85 )   $ (101 )
    Long-term inventory costing adjustments (3)   17       (62 )     9       (35 )
    Deficiencies under minimum volume commitments, net (4)   41       (8 )     31       (12 )
    Equity-indexed compensation expense (5)   (8 )     (8 )     (36 )     (36 )
    Foreign currency revaluation (6)   1       (11 )     17       (8 )
    Line 901 incident (7)   (225 )     (10 )     (345 )     (10 )
    Transaction-related expenses (8)   —       —       —       (1 )
    Selected items impacting comparability – Adjusted EBITDA $ (180 )   $ (56 )   $ (409 )   $ (203 )
    Gain on investments in unconsolidated entities, net   15       —       15       28  
    Gains/(losses) on asset sales, asset impairments and other, net (9)   (159 )     9       (160 )     152  
    Tax effect on selected items impacting comparability   3       4       13       13  
    Aggregate selected items impacting noncontrolling interests   —       —       (5 )     (10 )
    Selected items impacting comparability – Adjusted net income attributable to PAA $ (321 )   $ (43 )   $ (546 )   $ (20 )
         
    (1)  Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability. See the “Net Income to Adjusted EBITDA attributable to PAA and Implied DCF Reconciliation” and “Computation of Basic and Diluted Adjusted Net Income Per Common Unit” table for additional details on how these selected items impacting comparability affect such measures.
    (2) We use derivative instruments for risk management purposes and our related processes include specific identification of hedging instruments to an underlying hedged transaction. Although we identify an underlying transaction for each derivative instrument we enter into, there may not be an accounting hedge relationship between the instrument and the underlying transaction. In the course of evaluating our results, we identify differences in the timing of earnings from the derivative instruments and the underlying transactions and exclude the related gains and losses in determining adjusted results such that the earnings from the derivative instruments and the underlying transactions impact adjusted results in the same period. In addition, we exclude gains and losses on derivatives that are related to (i) investing activities, such as the purchase of linefill, and (ii) purchases of long-term inventory. We also exclude the impact of corresponding inventory valuation adjustments, as applicable. For applicable periods, we excluded gains and losses from the mark-to-market of the embedded derivative associated with the Preferred Distribution Rate Reset Option of our Series A preferred units.
    (3) We carry crude oil and NGL inventory that is comprised of minimum working inventory requirements in third-party assets and other working inventory that is needed for our commercial operations. We consider this inventory necessary to conduct our operations and we intend to carry this inventory for the foreseeable future. Therefore, we classify this inventory as long-term on our balance sheet and do not hedge the inventory with derivative instruments (similar to linefill in our own assets). We treat the impact of changes in the average cost of the long-term inventory (that result from fluctuations in market prices) and write-downs of such inventory that result from price declines as a selected item impacting comparability.
    (4) We, and certain of our equity method investees, have certain agreements that require counterparties to deliver, transport or throughput a minimum volume over an agreed upon period. Substantially all of such agreements were entered into with counterparties to economically support the return on capital expenditure necessary to construct the related asset. Some of these agreements include make-up rights if the minimum volume is not met. We record a receivable from the counterparty in the period that services are provided or when the transaction occurs, including amounts for deficiency obligations from counterparties associated with minimum volume commitments. If a counterparty has a make-up right associated with a deficiency, we defer the revenue attributable to the counterparty’s make-up right and subsequently recognize the revenue at the earlier of when the deficiency volume is delivered or shipped, when the make-up right expires or when it is determined that the counterparty’s ability to utilize the make-up right is remote. We include the impact of amounts billed to counterparties for their deficiency obligation, net of applicable amounts subsequently recognized into revenue or equity earnings, as a selected item impacting comparability. We believe the inclusion of the contractually committed revenues associated with that period is meaningful to investors as the related asset has been constructed, is standing ready to provide the committed service and the fixed operating costs are included in the current period results.
    (5) Our total equity-indexed compensation expense includes expense associated with awards that will be settled in units and awards that will be settled in cash. The awards that will be settled in units are included in our diluted net income per unit calculation when the applicable performance criteria have been met. We consider the compensation expense associated with these awards as a selected item impacting comparability as the dilutive impact of the outstanding awards is included in our diluted net income per unit calculation, as applicable. The portion of compensation expense associated with awards that will be settled in cash is not considered a selected item impacting comparability.
    (6) During the periods presented, there were fluctuations in the value of the Canadian dollar to the U.S. dollar, resulting in the realization of foreign exchange gains and losses on the settlement of foreign currency transactions as well as the revaluation of monetary assets and liabilities denominated in a foreign currency. The associated gains and losses are not integral to our results and were thus classified as a selected item impacting comparability.
    (7) Includes costs recognized during the period related to the Line 901 incident that occurred in May 2015. For the 2024 periods, includes the write-off of a receivable for Line 901 insurance proceeds in the fourth quarter of 2024 and the impact of settlements in the third quarter of 2024.
    (8) Includes expenses associated with the Rattler Permian Transaction.
    (9) For the 2024 periods, primarily includes non-cash charges related to the write-down of two U.S. NGL terminals. For the twelve months ended December 31, 2023 primarily includes gains related to the sale of our Keyera Fort Saskatchewan facility.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    SELECTED FINANCIAL DATA BY SEGMENT
    (in millions)
             
      Three Months Ended
    December 31, 2024    		     Three Months Ended
    December 31, 2023
      Crude Oil   NGL     Crude Oil   NGL
    Revenues (1) $ 11,959     $ 535       $ 12,187     $ 623  
    Purchases and related costs (1)   (11,019 )     (300 )       (11,306 )     (364 )
    Field operating costs (2)(3)   (503 )     (75 )       (274 )     (89 )
    Segment general and administrative expenses (2) (4)   (74 )     (19 )       (68 )     (19 )
    Equity earnings in unconsolidated entities   154       —         92       —  
                     
    Other segment items: (5)                
    Depreciation and amortization of unconsolidated entities   26       —         20       —  
    Derivative activities and inventory valuation adjustments   (16 )     22         (52 )     9  
    Long-term inventory costing adjustments   (9 )     (8 )       58       4  
    Deficiencies under minimum volume commitments, net   (41 )     —         8       —  
    Equity-indexed compensation expense   8       —         8       —  
    Foreign currency revaluation   (4 )     (1 )       18       5  
    Line 901 incident   225       —         10       —  
    Segment amounts attributable to noncontrolling interests (6)   (137 )     —         (138 )     —  
    Segment Adjusted EBITDA $ 569     $ 154       $ 563     $ 169  
                     
    Maintenance capital expenditures $ 48     $ 25       $ 39     $ 24  
         
    (1) Includes intersegment amounts.
    (2) Field operating costs and Segment general and administrative expenses include equity-indexed compensation expense.
    (3) Field operating costs for the three months ended December 31, 2024 include higher expenses related to (i) $225 million resulting from the write-off of a receivable for Line 901 insurance proceeds and (ii) an increase in estimated costs for long-term environmental remediation obligations.
    (4) Segment general and administrative expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment require judgment by management and are based on the business activities that exist during each period.
    (5) Represents adjustments utilized by our CODM in the evaluation of segment results. Many of these adjustments are also considered selected items impacting comparability when calculating consolidated non-GAAP financial measures such as Adjusted EBITDA. See the “Selected Items Impacting Comparability” table for additional discussion.
    (6) Reflects amounts attributable to noncontrolling interests in the Permian JV, Cactus II Pipeline LLC and Red River Pipeline LLC.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    SELECTED FINANCIAL DATA BY SEGMENT
    (in millions)
             
      Twelve Months Ended
    December 31, 2024    		     Twelve Months Ended
    December 31, 2023
      Crude Oil   NGL     Crude Oil   NGL
    Revenues (1) $ 48,720     $ 1,724       $ 47,174     $ 1,935  
    Purchases and related costs (1)   (45,033 )     (898 )       (43,805 )     (1,123 )
    Field operating costs (2)(3)   (1,440 )     (328 )       (1,053 )     (372 )
    Segment general and administrative expenses (2) (4)   (298 )     (83 )       (271 )     (79 )
    Equity earnings in unconsolidated entities   452       —         369       —  
                     
    Other segment items: (5)                
    Depreciation and amortization of unconsolidated entities   84       —         87       —  
    Derivative activities and inventory valuation adjustments   5       80         17       142  
    Long-term inventory costing adjustments   1       (10 )       22       13  
    Deficiencies under minimum volume commitments, net   (31 )     —         12       —  
    Equity-indexed compensation expense   36       —         35       1  
    Foreign currency revaluation   (22 )     (5 )       19       5  
    Line 901 incident   345       —         10       —  
    Transaction-related expenses   —       —         1       —  
    Segment amounts attributable to noncontrolling interests (6)   (543 )     —         (454 )     —  
    Segment Adjusted EBITDA $ 2,276     $ 480       $ 2,163     $ 522  
                     
    Maintenance capital expenditures $ 183     $ 78       $ 145     $ 86  
         
    (1) Includes intersegment amounts.
    (2) Field operating costs and Segment general and administrative expenses include equity-indexed compensation expense.
    (3) Field operating costs for the twelve months ended December 31, 2024 include higher expenses related to (i) $225 million resulting from the write-off of a receivable for Line 901 insurance proceeds, (ii) $120 million associated with settlements related to the Line 901 incident that occurred in May 2015 and (iii) an increase in estimated costs for long-term environmental remediation obligations.
    (4) Segment general and administrative expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment require judgment by management and are based on the business activities that exist during each period.
    (5) Represents adjustments utilized by our CODM in the evaluation of segment results. Many of these adjustments are also considered selected items impacting comparability when calculating consolidated non-GAAP financial measures such as Adjusted EBITDA. See the “Selected Items Impacting Comparability” table for additional discussion.
    (6) Reflects amounts attributable to noncontrolling interests in the Permian JV, Cactus II Pipeline LLC and Red River Pipeline LLC.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    OPERATING DATA BY SEGMENT
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024
    		   2023
    		   2024
    		   2023
    Crude Oil Segment Volumes                              
    Crude oil pipeline tariff (by region) (1)                              
    Permian Basin (2)   6,846       6,710       6,731       6,356  
    South Texas / Eagle Ford (2)   421       411       403       410  
    Mid-Continent (2)   478       503       506       507  
    Gulf Coast (2)   214       250       218       260  
    Rocky Mountain (2)   461       452       474       372  
    Western   259       237       256       214  
    Canada   349       340       346       341  
    Total crude oil pipeline tariff (1) (2)   9,028       8,903       8,934       8,460  
                                   
    Commercial crude oil storage capacity (2) (3)   72       72       72       72  
                                   
    Crude oil lease gathering purchases (1)   1,661       1,518       1,586       1,452  
                                   
    NGL Segment Volumes (1)                              
    NGL fractionation   138       127       132       115  
    NGL pipeline tariff   224       188       213       180  
    Propane and butane sales   127       125       92       86  
         
    (1) Average volumes in thousands of barrels per day calculated as the total volumes (attributable to our interest for assets owned by unconsolidated entities or through undivided joint interests) for the period divided by the number of days in the period. Volumes associated with assets acquired during the period represent total volumes for the number of days we actually owned the assets divided by the number of days in the period.
    (2) Includes volumes (attributable to our interest) from assets owned by unconsolidated entities.
    (3) Average monthly capacity in millions of barrels calculated as total volumes for the period divided by the number of months in the period.
         
    PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    NON-GAAP SEGMENT RECONCILIATIONS
    (in millions)
           
    Supplemental Adjusted EBITDA attributable to PAA Reconciliation:      
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024
    		   2023
    		   2024
    		   2023
    Crude Oil Segment Adjusted EBITDA $ 569     $ 563     $ 2,276     $ 2,163  
    NGL Segment Adjusted EBITDA   154       169       480       522  
    Adjusted other income, net (1)   6       5       23       26  
    Adjusted EBITDA attributable to PAA (2) $ 729     $ 737     $ 2,779     $ 2,711  
         
    (1)  Represents “Other income, net” as reported on our Condensed Consolidated Statements of Operations, excluding interest income on promissory notes by and among PAA and certain Plains entities, as well as other income, net attributable to noncontrolling interests, adjusted for selected items impacting comparability. See the “Selected Items Impacting Comparability” table for additional information.
    (2) See the “Net Income to Adjusted EBITDA attributable to PAA and Implied DCF Reconciliation” table for reconciliation to Net Income.
         
    PLAINS GP HOLDINGS AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
    (in millions, except per share data)
             
      Three Months Ended
    December 31, 2024    		     Three Months Ended
    December 31, 2023
          Consolidating             Consolidating    
      PAA   Adjustments (1)   PAGP     PAA   Adjustments (1)   PAGP
    REVENUES $ 12,402     $ —     $ 12,402       $ 12,698     $ —     $ 12,698  
                             
    COSTS AND EXPENSES                        
    Purchases and related costs   11,227       —       11,227         11,558       —       11,558  
    Field operating costs   578       —       578         363       —       363  
    General and administrative expenses   93       1       94         87       1       88  
    Depreciation and amortization   258       —       258         273       —       273  
    (Gains)/losses on asset sales, asset impairments and other, net   159       —       159         (9 )     —       (9 )
    Total costs and expenses   12,315       1       12,316         12,272       1       12,273  
                             
    OPERATING INCOME   87       (1 )     86         426       (1 )     425  
                             
    OTHER INCOME/(EXPENSE)                        
    Equity earnings in unconsolidated entities   154       —       154         92       —       92  
    Gain on investments in unconsolidated entities, net   15       —       15         —       —       —  
    Interest expense, net   (112 )     17       (95 )       (97 )     —       (97 )
    Other income, net   20       (17 )     3         17       —       17  
                             
    INCOME BEFORE TAX   164       (1 )     163         438       (1 )     437  
    Current income tax expense   (52 )     —       (52 )       (41 )     —       (41 )
    Deferred income tax (expense)/benefit   7       (2 )     5         2       (16 )     (14 )
                             
    NET INCOME   119       (3 )     116         399       (17 )     382  
    Net income attributable to noncontrolling interests   (83 )     (44 )     (127 )       (87 )     (243 )     (330 )
    NET INCOME/(LOSS) ATTRIBUTABLE TO PAGP $ 36     $ (47 )   $ (11 )     $ 312     $ (260 )   $ 52  
                             
    Basic and diluted weighted average Class A shares outstanding     197                 196  
                             
    Basic and diluted net income/(loss) per Class A share   $ (0.05 )             $ 0.27  
         
    (1)  Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for PAGP.
         
    PLAINS GP HOLDINGS AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
    (in millions, except per share data)
             
      Twelve Months Ended
    December 31, 2024    		     Twelve Months Ended
    December 31, 2023
          Consolidating             Consolidating    
      PAA   Adjustments (1)   PAGP     PAA   Adjustments (1)   PAGP
    REVENUES $ 50,073     $ —     $ 50,073       $ 48,712     $ —     $ 48,712  
                             
    COSTS AND EXPENSES                        
    Purchases and related costs   45,560       —       45,560         44,531       —       44,531  
    Field operating costs   1,768       —       1,768         1,425       —       1,425  
    General and administrative expenses   381       6       387         350       6       356  
    Depreciation and amortization   1,026       —       1,026         1,048       3       1,051  
    (Gains)/losses on asset sales, asset impairments and other, net   160       —       160         (152 )     —       (152 )
    Total costs and expenses   48,895       6       48,901         47,202       9       47,211  
                             
    OPERATING INCOME   1,178       (6 )     1,172         1,510       (9 )     1,501  
                             
    OTHER INCOME/(EXPENSE)                        
    Equity earnings in unconsolidated entities   452       —       452         369       —       369  
    Gain on investments in unconsolidated entities, net   15       —       15         28       —       28  
    Interest expense, net   (430 )     48       (382 )       (386 )     —       (386 )
    Other income, net   65       (48 )     17         102       —       102  
                             
    INCOME BEFORE TAX   1,280       (6 )     1,274         1,623       (9 )     1,614  
    Current income tax expense   (195 )     —       (195 )       (145 )     —       (145 )
    Deferred income tax (expense)/benefit   28       (37 )     (9 )       24       (68 )     (44 )
                             
    NET INCOME   1,113       (43 )     1,070         1,502       (77 )     1,425  
    Net income attributable to noncontrolling interests   (341 )     (626 )     (967 )       (272 )     (955 )     (1,227 )
    NET INCOME ATTRIBUTABLE TO PAGP $ 772     $ (669 )   $ 103       $ 1,230     $ (1,032 )   $ 198  
                             
    Basic and diluted weighted average Class A shares outstanding     197                 195  
                             
    Basic and diluted net income per Class A share   $ 0.52               $ 1.01  
         
    (1)  Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for PAGP.
         
    PLAINS GP HOLDINGS AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    CONDENSED CONSOLIDATING BALANCE SHEET DATA
    (in millions)
             
      December 31, 2024     December 31, 2023
          Consolidating             Consolidating    
      PAA   Adjustments (1)   PAGP     PAA   Adjustments (1)   PAGP
    ASSETS                        
    Current assets $ 4,802     $ (26 )   $ 4,776       $ 4,913     $ 3     $ 4,916  
    Property and equipment, net   15,424       —       15,424         15,782       —       15,782  
    Investments in unconsolidated entities   2,811       —       2,811         2,820       —       2,820  
    Intangible assets, net   1,677       —       1,677         1,875       —       1,875  
    Deferred tax asset   —       1,220       1,220         —       1,239       1,239  
    Linefill   968       —       968         976       —       976  
    Long-term operating lease right-of-use assets, net   332       —       332         313       —       313  
    Long-term inventory   280       —       280         265       —       265  
    Other long-term assets, net   268       —       268         411       —       411  
    Total assets $ 26,562     $ 1,194     $ 27,756       $ 27,355     $ 1,242     $ 28,597  
                             
    LIABILITIES AND PARTNERS’ CAPITAL                        
    Current liabilities $ 4,950     $ (26 )   $ 4,924       $ 5,003     $ 2     $ 5,005  
    Senior notes, net   7,141       —       7,141         7,242       —       7,242  
    Other long-term debt, net   72       —       72         63       —       63  
    Long-term operating lease liabilities   313       —       313         274       —       274  
    Other long-term liabilities and deferred credits   990       —       990         1,041       —       1,041  
    Total liabilities   13,466       (26 )     13,440         13,623       2       13,625  
                             
    Partners’ capital excluding noncontrolling interests   9,813       (8,462 )     1,351         10,422       (8,874 )     1,548  
    Noncontrolling interests   3,283       9,682       12,965         3,310       10,114       13,424  
    Total partners’ capital   13,096       1,220       14,316         13,732       1,240       14,972  
    Total liabilities and partners’ capital $ 26,562     $ 1,194     $ 27,756       $ 27,355     $ 1,242     $ 28,597  
         
    (1)  Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for PAGP.
         
    PLAINS GP HOLDINGS AND SUBSIDIARIES
    FINANCIAL SUMMARY (unaudited)
    COMPUTATION OF BASIC AND DILUTED NET INCOME/(LOSS) PER CLASS A SHARE
    (in millions, except per share data)
           
      Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
      2024   2023
    		   2024
    		   2023
    Basic and Diluted Net Income/(Loss) per Class A Share              
    Net income/(loss) attributable to PAGP $ (11 )   $ 52     $ 103     $ 198  
    Basic and diluted weighted average Class A shares outstanding   197       196       197       195  
                   
    Basic and diluted net income/(loss) per Class A share $ (0.05 )   $ 0.27     $ 0.52     $ 1.01  
                                   

    Forward-Looking Statements

    Except for the historical information contained herein, the matters discussed in this release consist of forward-looking statements that involve certain risks and uncertainties that could cause actual results or outcomes to differ materially from results or outcomes anticipated in the forward-looking statements. These risks and uncertainties include, among other things, the following:

    • general economic, market or business conditions in the United States and elsewhere (including the potential for a recession or significant slowdown in economic activity levels, the risk of persistently high inflation and supply chain issues, the impact of global public health events, such as pandemics, on demand and growth, and the timing, pace and extent of economic recovery) that impact (i) demand for crude oil, drilling and production activities and therefore the demand for the midstream services we provide and (ii) commercial opportunities available to us;
    • declines in global crude oil demand and/or crude oil prices or other factors that correspondingly lead to a significant reduction of North American crude oil and NGL production (whether due to reduced producer cash flow to fund drilling activities or the inability of producers to access capital, or both, the unavailability of pipeline and/or storage capacity, the shutting-in of production by producers, government-mandated pro-ration orders, or other factors), which in turn could result in significant declines in the actual or expected volume of crude oil and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of our assets and/or the reduction of the margins we can earn or the commercial opportunities that might otherwise be available to us;
    • fluctuations in refinery capacity and other factors affecting demand for various grades of crude oil and NGL and resulting changes in pricing conditions or transportation throughput requirements;
    • unanticipated changes in crude oil and NGL market structure, grade differentials and volatility (or lack thereof);
    • the effects of competition and capacity overbuild in areas where we operate, including downward pressure on rates, volumes and margins, contract renewal risk and the risk of loss of business to other midstream operators who are willing or under pressure to aggressively reduce transportation rates in order to capture or preserve customers;
    • the successful operation of joint ventures and joint operating arrangements we enter into from time to time, whether relating to assets operated by us or by third parties, and the successful integration and future performance of acquired assets or businesses;
    • the availability of, and our ability to consummate, acquisitions, divestitures, joint ventures or other strategic opportunities and realize benefits therefrom;
    • environmental liabilities, litigation or other events that are not covered by an indemnity, insurance or existing reserves;
    • negative societal sentiment regarding the hydrocarbon energy industry and the continued development and consumption of hydrocarbons, which could influence consumer preferences and governmental or regulatory actions that adversely impact our business;
    • the occurrence of a natural disaster, catastrophe, terrorist attack (including eco-terrorist attacks) or other event that materially impacts our operations, including cyber or other attacks on our or our service providers’ electronic and computer systems;
    • weather interference with business operations or project construction, including the impact of extreme weather events or conditions (including wildfires and drought);
    • the impact of current and future laws, rulings, legislation, governmental regulations, executive orders, trade policies, tariffs, accounting standards and statements, and related interpretations that (i) prohibit, restrict or regulate the development of oil and gas resources and the related infrastructure on lands dedicated to or served by our pipelines, (ii) negatively impact our ability to develop, operate or repair midstream assets, or (iii) otherwise negatively impact our business or increase our exposure to risk;
    • negative impacts on production levels in the Permian Basin or elsewhere due to issues associated with (or laws, rules or regulations relating to) hydraulic fracturing and related activities (including wastewater injection or disposal), including earthquakes, subsidence, expansion or other issues;
    • the pace of development of natural gas or other infrastructure and its impact on expected crude oil production growth in the Permian Basin;
    • the refusal or inability of our customers or counterparties to perform their obligations under their contracts with us (including commercial contracts, asset sale agreements and other agreements), whether justified or not and whether due to financial constraints (such as reduced creditworthiness, liquidity issues or insolvency), market constraints, legal constraints (including governmental orders or guidance), the exercise of contractual or common law rights that allegedly excuse their performance (such as force majeure or similar claims) or other factors;
    • loss of key personnel and inability to attract and retain new talent;
    • disruptions to futures markets for crude oil, NGL and other petroleum products, which may impair our ability to execute our commercial or hedging strategies;
    • the effectiveness of our risk management activities;
    • shortages or cost increases of supplies, materials or labor;
    • maintenance of our credit ratings and ability to receive open credit from our suppliers and trade counterparties;
    • our inability to perform our obligations under our contracts, whether due to non-performance by third parties, including our customers or counterparties, market constraints, third-party constraints, supply chain issues, legal constraints (including governmental orders or guidance), or other factors or events;
    • the incurrence of costs and expenses related to unexpected or unplanned capital or maintenance expenditures, third-party claims or other factors;
    • failure to implement or capitalize, or delays in implementing or capitalizing, on investment capital projects, whether due to permitting delays, permitting withdrawals or other factors;
    • tightened capital markets or other factors that increase our cost of capital or limit our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, investment capital projects, working capital requirements and the repayment or refinancing of indebtedness;
    • the amplification of other risks caused by volatile or closed financial markets, capital constraints, liquidity concerns and inflation;
    • the use or availability of third-party assets upon which our operations depend and over which we have little or no control;
    • the currency exchange rate of the Canadian dollar to the United States dollar;
    • inability to recognize current revenue attributable to deficiency payments received from customers who fail to ship or move more than minimum contracted volumes until the related credits expire or are used;
    • significant under-utilization of our assets and facilities;
    • increased costs, or lack of availability, of insurance;
    • fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plans;
    • risks related to the development and operation of our assets; and
    • other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil, as well as in the processing, transportation, fractionation, storage and marketing of NGL as discussed in the Partnerships’ filings with the Securities and Exchange Commission.

    About Plains:

    PAA is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil and natural gas liquids (“NGL”). PAA owns an extensive network of pipeline gathering and transportation systems, in addition to terminalling, storage, processing, fractionation and other infrastructure assets serving key producing basins, transportation corridors and major market hubs and export outlets in the United States and Canada. On average, PAA handles over 8 million barrels per day of crude oil and NGL.

    PAGP is a publicly traded entity that owns an indirect, non-economic controlling general partner interest in PAA and an indirect limited partner interest in PAA, one of the largest energy infrastructure and logistics companies in North America.

    PAA and PAGP are headquartered in Houston, Texas. For more information, please visit www.plains.com.

    Contacts:

    Blake Fernandez
    Vice President, Investor Relations
    (866) 809-1291
     
    Michael Gladstein
    Director, Investor Relations
    (866) 809-1291

    The MIL Network –

  • MIL-OSI Europe: Answer to a written question – Commission’s vision and action on e-fuels – E-002820/2024(ASW)

    Source: European Parliament

    Several initiatives that promote the use of e-fuels have already been adopted over recent years. The revised Renewable Energy Directive[1] notably sets targets for the uptake of renewable fuels of non-biological origin in transport and industry.

    The RefuelEU Aviation Regulation[2] sets targets for the increased use of sustainable aviation fuels and includes specific targets for e-fuels.

    The FuelEU Maritime Regulation[3] sets targets for the use of renewable, low-carbon fuels and clean energy technologies for ships.

    ‘Zero rating’ these fuels in the Emissions Trading System (ETS) provides them with a significant financial incentive. 20 million ETS allowances have been set aside for covering part or all of the price gap between sustainable aviation fuels and fossil fuels in the aviation sector.

    The Innovation Fund already provides support, including around EUR 1 billion for 16 sustainable fuel projects (including e-fuels and biofuels) and EUR 2 billion to 30 projects producing hydrogen as principal product. The transport industry will benefit as potential fuel user of these projects.

    The Commission plans to propose an initiative to boost renewable energy, including a 2040 renewable energy target. Getting to the 2035 climate neutrality target for cars will require a technology-neutral approach, in which e-fuels have a role to play, through a targeted amendment of the regulation on CO2 standards[4] as part of the foreseen review in 2026.

    The Commission is aware of the projected scarcity of these fuels and the need for their availability in other sectors without technical alternatives.

    To support sustainable transport fuels in the hard-to-abate sectors (aviation and maritime), the Commission will put forward a ‘Sustainable Transport Investment Plan’.

    • [1] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023L2413
    • [2] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023R2405
    • [3] https://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=CELEX:32023R1805
    • [4] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02019R0631-20240101
    Last updated: 7 February 2025

    MIL OSI Europe News –

  • MIL-OSI: Synaptics Reports Second Quarter Fiscal 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    Q2’25 Financial Results and Recent Business Highlights

    • Revenue of $267.2 million
    • GAAP gross margin of 45.7 percent
    • Non-GAAP gross margin of 53.6 percent
    • GAAP diluted earnings per share of $0.05
    • Non-GAAP diluted earnings per share of $0.92
    • Signed a new agreement with Broadcom, accelerating our Edge AI strategy
    • Repurchased approximately one million shares for $74.5 million

    SAN JOSE, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) — Synaptics Incorporated (Nasdaq: SYNA) today reported financial results for its second quarter of fiscal 2025 ended December 28, 2024.

    Net revenue for the second quarter of fiscal 2025 was $267.2 million. GAAP net income for the second quarter of fiscal 2025 was $1.8 million, or $0.05 per diluted share. Non-GAAP net income for the second quarter of fiscal 2025 was $36.6 million, or $0.92 per diluted share.

    “We delivered another solid quarter, marking our third consecutive quarter of both sequential and year-over-year revenue growth. Core IoT products grew 63% year-over-year in the second quarter—a testament to our leadership in this rapidly expanding market. Additionally, our strategic transaction with Broadcom further strengthens our Core IoT position. This agreement, coupled with our ongoing organic growth, increases my confidence in the company’s long-term growth potential,” said Ken Rizvi, Synaptics’ Interim CEO and Chief Financial Officer.

    Business Outlook
    Ken Rizvi, added, “We are seeing stable to improving trends in most of our end markets. While the fiscal third quarter is down sequentially due to seasonality, our guidance reflects continued year-over-year growth in our business. Our strong balance sheet and positive cash flow, positions us to capitalize on both organic and inorganic growth opportunities, while also returning capital to shareholders through share buybacks.”

    The third quarter fiscal 2025 outlook information provided below is based on the company’s current estimates and is not a guarantee of future performance. These statements are forward-looking and actual results may differ materially. Refer to the “Cautionary Statement Regarding Forward-Looking Statements” section below for information on the factors that could cause the Company’s actual results to differ materially from these forward-looking statements.

    For the third quarter of fiscal 2025, the company expects:

           
      GAAP Non-GAAP Adjustment Non-GAAP
           
    Revenue $265M ± $15M N/A N/A
           
    Gross Margin* 45.2 percent ±
    2.0 percent    		 $22M ± $1M 53.5 percent ± 1.0 percent
           
    Operating Expense** $141M ± $3M $40M ± $1M $101M ± $2M
           
    Earnings (loss) per share*** ($0.47) ± $0.30 $1.32 ± $0.10 $0.85 ± $0.20
           
    * Projected Non-GAAP gross margin excludes $20.0 to $22.0 million acquisition and integration-related costs and $1.0 million share-based compensation.
    ** Projected Non-GAAP operating expense excludes $34.0 to $35.0 million share-based compensation, $1.0 to $2.0 million restructuring costs, and $4.0 million acquisition and integration related costs.
    *** Projected Non-GAAP earnings (loss) per share excludes $0.89 to $0.92 share-based compensation, $0.03 to $0.05 restructuring costs, $0.60 to $0.65 acquisition and integration related costs, and ($0.20) other non-cash and Non-GAAP tax adjustments.

    Our outlook incorporates the effects of the company’s recent asset acquisition from Broadcom. However, the company has not completed its assessment of the provisional fair values of the assets and liabilities, and therefore, our GAAP outlook does not reflect the impact of any differences between the carrying values and fair values of Broadcom’s assets or liabilities, including share-based compensation and the impact of amortization of any identifiable intangible assets.

    Earnings Call and Supplementary Materials
    The Synaptics second quarter fiscal 2025 teleconference and webcast is scheduled to begin at 2:00 p.m. PT (5:00 p.m. ET), on Thursday, February 6, 2025, during which the company may discuss forward-looking information.

    Speaker:

    • Ken Rizvi, Interim CEO and Chief Financial Officer

    To participate on the live call, analysts and investors should pre-register at Synaptics Q2 FY2025 Earnings Call Registration.
    https://register.vevent.com/register/BI158a46a65d6743c6b0846d8242dcea87. Supplementary slides, a copy of the prepared remarks, and a live and archived webcast of the conference call will be accessible from the “Investor Relations” section of the company’s website at https://investor.synaptics.com/.

    About Synaptics Incorporated:
    Synaptics (Nasdaq: SYNA) is driving innovation in AI at the Edge, bringing AI closer to end users and transforming how we engage with intelligent connected devices, whether at home, at work, or on the move. As a go-to partner for forward-thinking product innovators, Synaptics powers the future with its cutting-edge Synaptics Astra™ AI-Native embedded compute, Veros™ wireless connectivity, and multimodal sensing solutions. We’re making the digital experience smarter, faster, more intuitive, secure, and seamless. From touch, display, and biometrics to AI-driven wireless connectivity, video, vision, audio, speech, and security processing, Synaptics is the force behind the next generation of technology enhancing how we live, work, and play. Follow Synaptics on LinkedIn, X and Facebook, or visit synaptics.com.

    Use of Non-GAAP Financial Information
    In evaluating its business, Synaptics considers and uses Non-GAAP Net Income, which we define as net income excluding share-based compensation, acquisition-related costs, and certain other non-cash or recurring and non-recurring items the company does not believe are indicative of its core operating performance, as a supplemental measure of operating performance. Non-GAAP Net Income is not a measurement of the company’s financial performance under GAAP and should not be considered as an alternative to GAAP Net Income. The company presents Non-GAAP Net Income because it considers it an important supplemental measure of its performance since it facilitates operating performance comparisons from period to period by eliminating potential differences in net income caused by the existence and timing of share-based compensation charges, acquisition and integration-related costs, restructuring costs, and certain other non-cash or recurring and non-recurring items. Non-GAAP Net Income has limitations as an analytical tool and should not be considered in isolation or as a substitute for the company’s GAAP Net Income. The principal limitations of this measure are that it does not reflect the company’s actual expenses and may thus have the effect of inflating its net income and net income per share as compared to its operating results reported under GAAP. In addition, the company presents components of Non-GAAP Net Income, such as Non-GAAP Gross Margin, Non-GAAP operating expenses and Non-GAAP operating margin, for similar reasons.

    As presented in the “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” tables that follow, Non-GAAP Net Income and each of the other Non-GAAP financial measures excludes one or more of the following items:

    Acquisition and integration-related costs
    Acquisition and integration-related costs primarily consist of:

    • amortization of purchased intangibles, which include acquired intangibles such as developed technology, customer relationships, trademarks, backlog, licensed technology, patents, and in-process technology when post-acquisition development is determined to be substantively complete;
    • inventory fair value adjustments affecting the carrying value of inventory acquired in an acquisition;
    • transitory post-acquisition incentive programs negotiated in connection with an acquired business or designed to encourage post-acquisition retention of key employees; and
    • legal and consulting costs directly associated with acquisitions, potential acquisitions and refinancing costs, including non-recurring acquisition related costs and services.

    These acquisition and integration-related costs are not factored into the company’s evaluation of its ongoing business operating performance or potential acquisitions, as they are not considered as part of the company’s principal operations. Further, the amount of these costs can vary significantly from period to period based on the terms of an earn-out arrangement, revisions to assumptions that went into developing the estimate of the contingent consideration associated with an earn-out arrangement, the size and timing of an acquisition, the lives assigned to the acquired intangible assets, and the maturity of the business acquired. Excluding acquisition related costs from Non-GAAP measures provides investors with a basis to compare Synaptics against the performance of other companies without the variability and potential earnings volatility associated with purchase accounting and acquisition-related items.

    Share-based compensation
    Share-based compensation expense relates to employee equity award programs and the vesting of the underlying awards, which includes stock options, deferred stock units, market stock units, performance stock units, phantom stock units and the employee stock purchase plan. Share-based compensation settled with stock, which includes stock options, deferred stock units, market stock units, performance stock units and the employee stock purchase plan, is a non-cash expense, while share-based compensation settled with cash, which includes phantom stock units, is a cash expense. Settlement of all employee equity award programs, whether settled with cash or stock, varies in amount from period to period and is dependent on market forces that are often beyond the company’s control. As a result, the company excludes share-based compensation from its internal operating forecasts and models. The company believes that Non-GAAP measures reflecting adjustments for share-based compensation provide investors with a basis to compare the company’s principal operating performance against the performance of peer companies without the variability created by share-based compensation resulting from the variety of equity-linked compensatory awards used by other companies and the varying methodologies and assumptions used.

    Intangible asset impairment charge
    Intangible asset impairment charge represent the excess carrying value of an indefinite-lived asset over its fair value. The intangible asset impairment charge is a non-cash charge. The company excludes intangible asset impairment charge from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that Non-GAAP measures, reflecting adjustments for intangible asset impairment charge, provide investors with a basis to compare the company’s principal operating performance against the performance of other companies without the variability created by the intangible asset impairment charge.

    Restructuring costs
    Restructuring costs are costs incurred to address cost structure inefficiencies of acquired or existing business operations and consist primarily of employee termination, asset disposal and office closure costs, including the reversal of such costs. As a result, the company excludes restructuring costs from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that Non-GAAP measures reflecting adjustments for restructuring costs provide investors with a basis to compare the company’s principal operating performance against the performance of other companies without the variability created by restructuring costs designed to address cost structure inefficiencies of acquired or existing business operations.

    Site remediation accrual
    Site remediation accrual represents an update to the estimated future costs associated with the ongoing planning and remediation of a site contamination project from an acquisition. As we evaluate progress on our ongoing remediation effort and as we work with governmental organizations to update our remediation plan to meet the evolving guidelines, we estimate costs associated with plan revisions to determine if our liability has changed. Excluding the site remediation accrual from Non-GAAP measures provides investors with a basis to compare Synaptics against the performance of other companies without the variability associated with the site remediation accrual.

    Legal settlement accruals and other
    Legal settlement accruals and other represent our estimated cost of settling legal claims and any obligations to indemnify a counterparty against third party claims that are unusual or infrequent. As a result, the company will exclude these settlement charges from its internal operating forecasts and models when evaluating its ongoing business performance. The company believes that non-GAAP measures reflecting an adjustment for settlement charges provide investors with a basis to compare the company’s principal operating performance against the performance of other companies without the variability created by unusual or infrequent settlement accruals designed to address non-recurring or non-routine costs.

    Loss on early extinguishment of debt
    Loss on extinguishment of debt represents a non-cash item based on the difference in the carrying value of the debt and the fair value of the debt when extinguished. Loss on early extinguishment of debt is excluded from Non-GAAP results as it is non-cash. Excluding loss on early extinguishment of debt from Non-GAAP measures provides investors with a basis to compare Synaptics against the performance of other companies without the variability associated with loss on early extinguishment of debt.

    Other non-cash items
    Other non-cash items include non-cash amortization of debt discount and issuance costs. These items are excluded from Non-GAAP results as they are non-cash. Excluding other non-cash items from Non-GAAP measures provides investors with a basis to compare Synaptics against the performance of other companies without the variability associated with other non-cash items.

    Non-GAAP tax adjustments
    The company forecasts its long-term Non-GAAP tax rate in order to provide investors with improved long-term modeling accuracy and consistency across financial reporting periods by eliminating the effects of certain items in our Non-GAAP net income and Non-GAAP net income per share, including the type and amount of share-based compensation, the taxation of post-acquisition intercompany intellectual property cross-licensing or transfer transactions, and the impact of other acquisition items that may or may not be tax deductible. The company intends to evaluate its long-term Non-GAAP tax rate annually for significant events, including material tax law changes in the major tax jurisdictions in which the company operates, corporate organizational changes related to acquisitions or tax planning opportunities, and substantive changes in our geographic earnings mix.

    Cautionary Statement Regarding Forward-Looking Statements
    This press release contains statements that are not historical facts but rather forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements related to the company’s current expectations and projections relating to its financial condition, results of operations, including the company’s financial guidance for third quarter fiscal 2025, plans, objectives, future performance and business, including the expected benefits from the transaction with Broadcom. Such forward-looking statements may include words such as “expect,” “anticipate,” “intend,” “believe,” “estimate,” “plan,” “target,” “strategy,” “continue,” “may,” “will,” “should,” variations of such words, or other words and terms of similar meaning. All forward-looking statements are based upon the company’s current expectations or various assumptions. The company’s expectations and assumptions are expressed in good faith, and the company believes there is a reasonable basis for them. However, there can be no assurance that such forward-looking statements will materialize or prove to be correct as forward-looking statements are inherently subject to known and unknown risks, uncertainties and other factors which may cause actual future results, performance or achievements to differ materially from the future results, performance or achievements expressed in or implied by such forward-looking statements. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those set out in the forward-looking statements, including risks related to the company’s dependence on its solutions for the Core IoT and Enterprise and Automotive product applications market for a substantial portion of its revenue; the volatility of the company’s net revenue from its solutions for Core IoT and Enterprise and Automotive product applications; the company’s dependence on one or more large customers; the company’s exposure to industry downturns and cyclicality in its target markets; the company’s ability to successfully offer product solutions for new markets; the company’s expectations regarding technology and strategic investments and the anticipated timing or benefits thereof; the company’s ability to execute on its cost reduction initiatives and to achieve expected synergies and expense reductions; the company’s ability to maintain and build relationships with its customers; the company’s dependence on third parties to maintain satisfactory manufacturing yields and deliverable schedule; the company’s indemnification obligations for any third party claims; the uncertainty surrounding macroeconomic factors in the United States, and globally, impacting the supply chain environment, inflationary pressure, workforce reductions, regional instabilities and hostilities (including the conflict in the Middle East), the company’s ability to recruit and retain key personnel, the company’s ability to realize anticipated benefits from the transaction with Broadcom, the company’s ability to grow sales and expand into the serviceable wireless market as expected, and other risks as identified in the “Risk Factors,” “Management’ Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections of the company’s most recent Annual Report on Form 10-K and the company’s most recent Quarterly Report on Form 10-Q; and other risks as identified from time to time in the company’s Securities and Exchange Commission reports. For any forward-looking statements contained in this press release, the company claims ​the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and the company assumes no obligation to update publicly or revise any forward-looking statements in light of new information or future events, except as required by law.

    Synaptics and the Synaptics logo are trademarks of Synaptics in the United States and/or other countries. All other marks are the property of their respective owners.

    For more information, please contact:
    Munjal Shah
    Head of Investor Relations
    +1-408-518-7639
    munjal.shah@synaptics.com

     
    SYNAPTICS INCORPORATED
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In millions)
    (Unaudited)
     
      December 2024   June 2024
    ASSETS      
    Current Assets:      
    Cash and cash equivalents $ 596.1     $ 876.9  
    Accounts receivable, net   146.5       142.4  
    Inventories, net   119.5       114.0  
    Prepaid expenses and other current assets   28.4       29.0  
    Total current assets   890.5       1,162.3  
    Property and equipment, net   75.3       75.5  
    Goodwill   819.9       816.4  
    Acquired intangibles, net   242.0       288.4  
    Deferred tax asset   368.5       345.6  
    Non-current other assets   131.3       136.8  
    Total assets $ 2,527.5     $ 2,825.0  
    LIABILITIES AND STOCKHOLDERS’ EQUITY      
    Current Liabilities:      
    Accounts payable $ 84.0     $ 87.5  
    Accrued compensation   31.2       27.4  
    Other accrued liabilities   114.6       156.3  
    Current portion of long-term debt   —       6.0  
    Total current liabilities   229.8       277.2  
    Long-term debt   832.5       966.9  
    Other long-term liabilities   89.1       114.1  
    Total liabilities   1,151.4       1,358.2  
    Stockholders’ Equity:      
    Common stock and additional paid-in capital   1,112.4       1,107.1  
    Treasury stock   (952.7 )     (878.0 )
    Retained earnings   1,216.4       1,237.7  
    Total stockholders’ equity   1,376.1       1,466.8  
    Total liabilities and stockholders’ equity $ 2,527.5     $ 2,825.0  
     
    SYNAPTICS INCORPORATED
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (In millions, except per share data)
    (Unaudited)
     
      Three Months Ended   Six Months Ended
      December   December
        2024       2023       2024       2023  
    Net revenue $ 267.2     $ 237.0     $ 524.9     $ 474.7  
    Cost of revenue   145.0       128.0       281.8       258.6  
    Gross margin   122.2       109.0       243.1       216.1  
    Operating expenses:              
    Research and development   83.3       82.0       164.6       168.5  
    Selling, general, and administrative   49.5       39.7       99.5       82.0  
    Acquired intangibles amortization (1)   3.8       3.9       7.6       9.4  
    Restructuring costs (2)   0.8       1.3       15.0       9.3  
    Total operating expenses   137.4       126.9       286.7       269.2  
    Operating loss   (15.2 )     (17.9 )     (43.6 )     (53.1 )
    Interest and other expense, net   (4.3 )     (6.1 )     (10.2 )     (11.5 )
    Loss on early extinguishment of debt   (6.5 )     —       (6.5 )     —  
    Loss before benefit from income taxes   (26.0 )     (24.0 )     (60.3 )     (64.6 )
    Benefit from income taxes   (27.8 )     (15.0 )     (39.0 )     —  
    Net income (loss) $ 1.8     $ (9.0 )   $ (21.3 )   $ (64.6 )
    Net income (loss) per share:              
    Basic $ 0.05     $ (0.23 )   $ (0.54 )   $ (1.66 )
    Diluted $ 0.05     $ (0.23 )   $ (0.54 )   $ (1.66 )
    Shares used in computing net income (loss):              
    Basic   39.7       39.2       39.7       38.9  
    Diluted   39.8       39.2       39.7       38.9  
    (1) These acquisition related costs consist primarily of amortization associated with certain acquired intangible assets.

    (2) Restructuring costs primarily include severance related costs associated with operational restructurings.    
     
    SYNAPTICS INCORPORATED
    Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
    (In millions, except per share data)
    (Unaudited)
     
      Three Months Ended   Six Months Ended
      December   December
        2024       2023       2024       2023  
    GAAP gross margin $ 122.2     $ 109.0     $ 243.1     $ 216.1  
    Acquisition and integration related costs   20.8       14.4       41.6       32.2  
    Share-based compensation   0.3       1.1       (2.4 )     2.2  
    Non-GAAP gross margin $ 143.3     $ 124.5     $ 282.3     $ 250.5  
    GAAP gross margin – percentage of revenue   45.7 %     46.0 %     46.3 %     45.5 %
    Acquisition and integration related costs – percentage of revenue   7.8 %     6.1 %     7.9 %     6.8 %
    Share-based compensation – percentage of revenue   0.1 %     0.4 %     (0.5 %)     0.5 %
    Non-GAAP gross margin – percentage of revenue   53.6 %     52.5 %     53.8 %     52.8 %
    GAAP research and development expense $ 83.3     $ 82.0     $ 164.6     $ 168.5  
    Share-based compensation   (15.6 )     (15.5 )     (30.1 )     (30.7 )
    Non-GAAP research and development expense $ 67.7     $ 66.5     $ 134.5     $ 137.8  
    GAAP selling, general, and administrative expense $ 49.5     $ 39.7       99.5       82.0  
    Share-based compensation   (18.7 )     (12.6 )     (34.1 )     (29.5 )
    Acquisition and integration related costs   (1.4 )     —       (4.7 )     —  
    Site remediation accrual   —       (1.6 )     —       (1.6 )
    Legal settlement accruals and other   —       —       (2.2 )     —  
    Non-GAAP selling, general, and administrative expense $ 29.4     $ 25.5     $ 58.5     $ 50.9  
    GAAP operating loss $ (15.2 )   $ (17.9 )   $ (43.6 )   $ (53.1 )
    Acquisition and integration related costs   26.0       18.3       53.9       41.6  
    Share-based compensation   34.6       29.2       61.8       62.4  
    Legal settlement accruals and other   —       —       2.2       —  
    Restructuring costs   0.8       1.3       15.0       9.3  
    Site remediation accrual   —       1.6       —       1.6  
    Non-GAAP operating income $ 46.2     $ 32.5     $ 89.3     $ 61.8  
    GAAP net income (loss) $ 1.8     $ (9.0 )   $ (21.3 )   $ (64.6 )
    Acquisition and integration related costs   26.0       18.3       53.9       41.6  
    Share-based compensation   34.6       29.2       61.8       62.4  
    Restructuring costs   0.8       1.3       15.0       9.3  
    Site remediation accrual   —       1.6       —       1.6  
    Legal settlement accruals and other   —       —       2.2       —  
    Loss on early extinguishment of debt   6.5       —       6.5       —  
    Other non-cash items   0.6       0.7       1.2       1.3  
    Non-GAAP tax adjustments   (33.7 )     (19.6 )     (50.2 )     (8.8 )
    Non-GAAP net income $ 36.6     $ 22.5     $ 69.1     $ 42.8  
    GAAP net income (loss) per share $ 0.05     $ (0.23 )   $ (0.54 )   $ (1.66 )
    Acquisition and integration related costs   0.65       0.47       1.36       1.07  
    Share-based compensation   0.87       0.74       1.56       1.60  
    Restructuring costs   0.02       0.03       0.38       0.24  
    Site remediation accrual   —       0.04       —       0.04  
    Legal settlement accruals and other   —       —       0.06       —  
    Loss on early extinguishment of debt   0.16       —       0.16       —  
    Other non-cash items   0.02       0.02       0.03       0.03  
    Non-GAAP tax adjustments   (0.85 )     (0.50 )     (1.26 )     (0.23 )
    Share adjustment   —       —       (0.02 )     —  
    Non-GAAP net income per share – diluted $ 0.92     $ 0.57     $ 1.73     $ 1.09  
     
    SYNAPTICS INCORPORATED
    CONDENSED CONSOLIDATED CASH FLOWS
    (In millions)
    (Unaudited)
     
      Six Months Ended
      December
        2024       2023  
    Net loss $ (21.3 )   $ (64.6 )
    Non-cash operating items   97.3       128.3  
    Changes in working capital   (64.6 )     20.9  
    Net cash provided by operating activities   11.4       84.6  
           
    Acquisition of business, net of cash and cash equivalents acquired   (0.8 )     —  
    Purchase of intangible assets   —       (13.5 )
    Purchases of short-term investments   —       (16.6 )
    Advance payment on intangible assets   —       (116.5 )
    Net proceeds from maturities and sales of short-term investments and other   —       23.9  
    Purchases of property and equipment   (13.8 )     (17.1 )
    Net cash used in investing activities   (14.6 )     (139.8 )
           
    Proceeds from issuance of convertible senior notes, net of issuance costs   439.5       —  
    Payment of debt issuance costs on convertible senior notes and revolving credit facility   (4.4 )     —  
    Payments for capped call transactions related to the convertible senior notes   (49.9 )     —  
    Repurchases of common stock, excluding excise taxes   (74.5 )     —  
    Equity compensation, net   (6.6 )     (21.1 )
    Repayment of debt   (583.5 )     (4.5 )
    Other   1.2       1.7  
    Net cash used in financing activities   (278.2 )     (23.9 )
    Effect of exchange rate changes on cash and cash equivalents   0.6       0.5  
    Net decrease in cash and cash equivalents   (280.8 )     (78.6 )
    Cash and cash equivalents, beginning of period   876.9       924.7  
    Cash and cash equivalents, end of period $ 596.1     $ 846.1  

    The MIL Network –

  • MIL-OSI: Lantronix Reports Results for Second Quarter of Fiscal 2025

    Source: GlobeNewswire (MIL-OSI)

    • Second Quarter Net Revenue of $31.2 Million
    • Second Quarter GAAP EPS of ($0.06)
    • Second Quarter Non-GAAP EPS of $0.04

    IRVINE, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) — Lantronix Inc. (NASDAQ: LTRX), a global leader of compute and connectivity for the Internet of Things (IoT) solutions enabling Artificial Intelligence (AI) Edge Intelligence, today reported results for its second quarter of fiscal 2025.

    Net revenue totaled $31.2 million, near the midpoint of the guidance range provided for the quarter.

    GAAP EPS of ($0.06), compared to ($0.07) in the prior year and $(0.07) in the prior quarter.

    Non-GAAP EPS of $0.04, compared to $0.08 in the prior year and $0.06 in the prior quarter.

    “Lantronix has the key assets in Compute and Connect to drive Edge Intelligence, and the company remains focused on three key vertical markets: Enterprise; Smart Cities including critical infrastructure; and Transportation,” said Lantronix President and CEO Saleel Awsare. “We are actively advancing Edge AI solutions, integrating the recently acquired IoT assets from Netcomm, and positioning Lantronix for exciting future growth.”

    Business Outlook

    For the third fiscal quarter of 2025, the company expects revenue in a range of $27.0 million to $31.0 million and non-GAAP EPS of $0.01 to $0.05 per share.

    Conference Call and Webcast

    Management will host an investor conference call and audio webcast on Thursday, Feb. 6, 2025, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its results for the second quarter of fiscal 2025 that ended Dec. 31, 2024. To access the live conference call, investors should dial 1-844-802-2442 (US) or 1-412-317-5135 (international) and indicate that they are participating in the Lantronix Q2 FY 2025 call. The webcast will be available simultaneously via the investor relations section of the company’s website.

    Investors can access a replay of the conference call starting at approximately 7:00 p.m. Pacific Time on Feb. 6, 2025, at the Lantronix website. A telephonic replay will also be available through Feb. 13, 2025, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) or Canada toll-free at 1-855-669-9658 and entering passcode 3433776.

    About Lantronix

    Lantronix Inc. is a global leader of compute and connectivity IoT solutions that target high-growth markets, including Smart Cities, Enterprise and Transportation. Lantronix’s products and services empower companies to succeed in the growing IoT markets by delivering customizable solutions that enable AI Edge Intelligence. Lantronix’s advanced solutions include Intelligent Substations infrastructure, Infotainment systems and Video Surveillance, supplemented with advanced Out-of-Band Management (OOB) for Cloud and Edge Computing.

    For more information, visit the Lantronix website.

    Discussion of Non-GAAP Financial Measures

    Lantronix believes that the presentation of non-GAAP financial information, when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors regarding financial and business trends relating to the company’s financial condition and results of operations. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative operating performance. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

    Non-GAAP net income consists of net loss excluding (i) share-based compensation and the employer portion of withholding taxes on stock grants, (ii) depreciation and amortization, (iii) interest income (expense), (iv) other income (expense), (v) income tax provision (benefit), (vi) restructuring, severance and related charges, (vii) acquisition related costs, (viii) impairment of long-lived assets, (ix) amortization of purchased intangibles, (x) amortization of manufacturing profit in acquired inventory, (xi) fair value remeasurement of earnout consideration, and (xii) loss on extinguishment of debt.

    Non-GAAP EPS is calculated by dividing non-GAAP net loss by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP EPS, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which for GAAP purposes is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.

    Guidance on earnings per share growth is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of certain items that have been excluded from the forward-looking non-GAAP measures, and a reconciliation to the comparable GAAP guidance has not been provided because certain factors that are materially significant to Lantronix’s ability to estimate the excluded items are not accessible or estimable on a forward-looking basis without unreasonable effort.

    Forward-Looking Statements

    This news release contains forward-looking statements, including statements concerning our revenue and earnings expectations for the third fiscal quarter of 2025, the market opportunities offered by the current shift towards edge computing and our positioning to capitalize on this trend, and our expectations regarding the benefits of our acquisition of Netcomm Wireless Pty Ltd. and our cost reduction initiatives. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. We have based our forward-looking statements on our current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our results or experiences, or future business, financial condition, results of operations or performance, to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this news release. Other factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: the effects of negative or worsening regional and worldwide economic conditions or market instability on our business, including effects on purchasing decisions by our customers; our ability to mitigate any disruption in our and our suppliers’ and vendors’ supply chains due to a pandemic or similar outbreak, wars and recent conflicts in Europe, Asia and the Middle East, hostilities in the Red Sea, or other causes; our ability to successfully convert our backlog and current demand;  the impact of a pandemic or similar outbreak on our business, employees, customers, supply and distribution chains and the global economy; our ability to successfully implement our acquisition strategy or integrate acquired companies; uncertainty as to the future profitability of acquired businesses, and delays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing and integrating new operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties; our ability to continue to generate revenue from products sold into mature markets; our ability to develop, market, and sell new products; our ability to succeed with our new software offerings; our use of AI may result in reputational, competitive or financial harm and liability; fluctuations in our revenue due to the project-based timing of orders from certain customers; unpredictable timing of our revenues due to the lengthy sales cycle for our products and services and potential delays in customer completion of projects; our ability to accurately forecast future demand for our products; delays in qualifying revisions of existing products; constraints or delays in the supply of, or quality control issues with, certain materials or components; difficulties associated with the delivery, quality or cost of our products from our contract manufacturers or suppliers; risks related to the outsourcing of manufacturing and international operations; difficulties associated with our distributors or resellers; intense competition in our industry and resultant downward price pressure; rises in inventory levels and inventory obsolescence; undetected software or hardware errors or defects in our products; cybersecurity risks; our ability to obtain appropriate industry certifications or approvals from governmental regulatory bodies; changes in applicable U.S. and foreign government laws, regulations, and tariffs; our ability to protect patents and other proprietary rights and avoid infringement of others’ proprietary technology rights; issues relating to the stability of our financial and banking institutions and relationships; the level of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; the impact of rising interest rates; our ability to attract and retain qualified management; and any additional factors included in our Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the Securities and Exchange Commission (the “SEC”) on Sept. 9, 2024, including in the section entitled “Risk Factors” in Item 1A of Part I of that report; in our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2024, to be filed with the SEC on Feb. 7, 2025, including in the section entitled “Risk Factors” in Item 1A of Part II of such report; and in our other public filings with the SEC. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of the Nasdaq Stock Market LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections.

    © 2025 Lantronix Inc. All rights reserved. Lantronix is a registered trademark.

    Lantronix Investor Relations Contact:
    investors@lantronix.com

    LANTRONIX, INC.
    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
     (In thousands)
           
      December 31,
    		   June 30,
        2024       2024  
    Assets      
    Current assets:      
    Cash and cash equivalents $ 19,210     $ 26,237  
    Accounts receivable, net   30,472       31,279  
    Inventories, net   29,070       27,698  
    Contract manufacturers’ receivables   3,473       1,401  
    Prepaid expenses and other current assets   3,329       2,335  
    Total current assets   85,554       88,950  
    Property and equipment, net   3,155       4,016  
    Goodwill   30,491       27,824  
    Intangible assets, net   4,910       5,251  
    Lease right-of-use assets   9,430       9,567  
    Other assets   683       600  
    Total assets $ 134,223     $ 136,208  
           
    Liabilities and stockholders’ equity      
    Current liabilities:      
    Accounts payable $ 15,975     $ 10,347  
    Accrued payroll and related expenses   2,968       5,836  
    Current portion of long-term debt, net   3,056       3,002  
    Other current liabilities   11,436       10,971  
    Total current liabilities   33,435       30,156  
    Long-term debt, net   11,630       13,219  
    Other non-current liabilities   11,245       11,478  
    Total liabilities   56,310       54,853  
           
    Commitments and contingencies      
           
    Stockholders’ equity:      
    Common stock   4       4  
    Additional paid-in capital   305,433       304,001  
    Accumulated deficit   (227,895 )     (223,021 )
    Accumulated other comprehensive income   371       371  
    Total stockholders’ equity   77,913       81,355  
    Total liabilities and stockholders’ equity $ 134,223     $ 136,208  
           
    LANTRONIX, INC.
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands, except per share data)
                       
                       
      Three Months Ended   Six Months Ended
      December 31,   September 30,   December 31,   December 31,
        2024       2024       2023       2024       2023  
    Net revenue $ 31,161     $ 34,423     $ 37,038     $ 65,584     $ 70,069  
    Cost of revenue   17,877       19,948       22,007       37,825       40,941  
    Gross profit   13,284       14,475       15,031       27,759       29,128  
    Operating expenses:                  
    Selling, general and administrative   8,811       9,467       10,224       18,278       19,394  
    Research and development   4,984       4,956       4,725       9,940       9,831  
    Restructuring, severance and related charges   193       900       530       1,093       550  
    Acquisition-related costs   208       29       –       237       –  
    Fair value remeasurement of earnout consideration   –       –       –       –       (9 )
    Amortization of intangible assets   1,248       1,251       1,310       2,499       2,694  
    Total operating expenses   15,444       16,603       16,789       32,047       32,460  
    Loss from operations   (2,160 )     (2,128 )     (1,758 )     (4,288 )     (3,332 )
    Interest expense, net   (126 )     (119 )     (232 )     (245 )     (570 )
    Other income (loss), net   8       (37 )     (23 )     (29 )     (4 )
    Loss before income taxes   (2,278 )     (2,284 )     (2,013 )     (4,562 )     (3,906 )
    Provision for income taxes   94       218       580       312       573  
    Net loss $ (2,372 )   $ (2,502 )   $ (2,593 )   $ (4,874 )   $ (4,479 )
    Net loss per share – basic and diluted $ (0.06 )   $ (0.07 )   $ (0.07 )   $ (0.13 )   $ (0.12 )
    Weighted-average common shares – basic and diluted   38,631       38,024       37,354       38,330       37,170  
                       
    LANTRONIX, INC.
    UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
    (In thousands, except per share data)
                       
      Three Months Ended   Six Months Ended
      December 31,   September 30,   December 31,   December 31,
        2024       2024       2023       2024       2023  
                       
    GAAP net loss $ (2,372 )   $ (2,502 )   $ (2,593 )   $ (4,874 )   $ (4,479 )
    Non-GAAP adjustments:                  
    Cost of revenue:                  
    Share-based compensation   48       64       64       112       105  
    Employer portion of withholding taxes on stock grants   2       5       1       7       5  
    Amortization of manufacturing profit in acquired inventory   –       –       189       –       506  
    Depreciation and amortization   114       123       109       237       195  
    Total adjustments to cost of revenue   164       192       363       356       811  
    Selling, general and administrative:                  
    Share-based compensation   1,044       1,126       1,628       2,170       2,901  
    Employer portion of withholding taxes on stock grants   20       78       10       98       47  
    Depreciation and amortization   348       351       338       699       672  
    Total adjustments to selling, general and administrative   1,412       1,555       1,976       2,967       3,620  
    Research and development:                  
    Share-based compensation   421       410       484       831       912  
    Employer portion of withholding taxes on stock grants   2       19       5       21       18  
    Depreciation and amortization   111       69       52       180       160  
    Total adjustments to research and development   534       498       541       1,032       1,090  
    Restructuring, severance and related charges   193       900       530       1,093       550  
    Acquisition related costs   208       29       –       237       –  
    Fair value remeasurement of earnout consideration   –       –       –       –       (9 )
    Amortization of purchased intangible assets   1,248       1,251       1,310       2,499       2,694  
    Litigation settlement cost   158       40       –       198       –  
    Total non-GAAP adjustments to operating expenses   3,753       4,273       4,357       8,026       7,945  
    Interest expense, net   126       119       232       245       570  
    Other (income) expense, net   (8 )     37       23       29       4  
    Provision for income taxes   94       218       580       312       573  
    Total non-GAAP adjustments   4,129       4,839       5,555       8,968       9,903  
    Non-GAAP net income $ 1,757     $ 2,337     $ 2,962     $ 4,094     $ 5,424  
                       
                       
    Non-GAAP net income per share – diluted $ 0.04     $ 0.06     $ 0.08     $ 0.10     $ 0.14  
                       
    Denominator for GAAP net income (loss) per share – diluted   38,631       38,024       37,354       38,330       37,170  
    Non-GAAP adjustment   953       1,257       1,228       901       938  
    Denominator for non-GAAP net income per share – diluted   39,584       39,281       38,582       39,231       38,108  
                       
    GAAP cost of revenue $ 17,877     $ 19,948     $ 22,007     $ 37,825     $ 40,941  
    Non-GAAP adjustments to cost of revenue   (164 )     (192 )     (363 )     (356 )     (811 )
    Non-GAAP cost of revenue   17,713       19,756       21,644       37,469       40,130  
    Non-GAAP gross profit $ 13,448     $ 14,667     $ 15,394     $ 28,115     $ 29,939  
    Non-GAAP gross margin   43.2 %     42.6 %     41.6 %     42.9 %     42.7 %
                       
    LANTRONIX, INC.
    UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION
    (In thousands)
                       
      Three Months Ended   Six Months Ended
      December 31, 2024   September 30, 2024   December 31, 2023   December 31, 2024   December 31, 2023
    Embedded IoT Solutions $ 10,784     $ 13,387     $ 11,764     $ 24,171     $ 23,137  
    IoT System Solutions   18,592       18,759       23,022       37,351       42,058  
    Software & Services   1,785       2,277       2,252       4,062       4,874  
      $ 31,161     $ 34,423     $ 37,038     $ 65,584     $ 70,069  
                       
                       
      Three Months Ended   Six Months Ended
      December 31, 2024   September 30, 2024   December 31, 2023   December 31, 2024   December 31, 2023
    Americas $ 16,386     $ 17,420     $ 20,601     $ 33,806     $ 43,534  
    EMEA   9,036       10,484       12,886       19,520       19,477  
    Asia Pacific Japan   5,739       6,519       3,551       12,258       7,058  
      $ 31,161     $ 34,423     $ 37,038     $ 65,584     $ 70,069  
                       

    The MIL Network –

  • MIL-OSI: Cerence Announces First Quarter Fiscal 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    BURLINGTON, Mass., Feb. 06, 2025 (GLOBE NEWSWIRE) — Cerence Inc. (NASDAQ: CRNC) (“Cerence AI”), a global industry leader in AI for transportation, today reported its first quarter fiscal year 2025 results for the quarter ended December 31, 2024.

     
    ResultsSummary(1,2)
    (in millions, except per share data)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    GAAP revenue   $ 50.9     $ 138.3  
    GAAP gross margin     65.0 %     81.0 %
    Non-GAAP gross margin     65.9 %     81.5 %
    GAAP operating margin     -33.3 %     42.3 %
    Non-GAAP operating margin     -1.0 %     49.4 %
    GAAP net (loss) income   $ (24.3 )   $ 23.9  
    GAAP net (loss) income margin     -47.7 %     17.2 %
    Non-GAAP net (loss) income   $ (1.5 )   $ 54.3  
    Adjusted EBITDA   $ 1.4     $ 70.4  
    Adjusted EBITDA margin     2.7 %     50.9 %
    GAAP net (loss) income per share – diluted   $ (0.57 )   $ 0.53  
    Non-GAAP net (loss) income per share – diluted   $ (0.03 )   $ 1.12  
    (1) As previously disclosed, Q1FY24 revenue includes the non-cash revenue associated with the Toyota “Legacy” contract and related impacts totaling $86.6M.
    (2) Please refer to the “Discussion of Non-GAAP Financial Measures” and “Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures” included elsewhere in this release for more information regarding our use of non-GAAP financial measures.
       

    “I’m incredibly proud of the team’s progress and our performance in Q1, most notably beating the upper end of guidance on top-line revenue and adjusted EBITDA and showing strong free cash flow,” said Brian Krzanich, CEO, Cerence AI. “We believe we have solid momentum for 2025: we’ve made significant progress on our generative AI roadmap, achieving critical development milestones for our next-gen agentic, conversational AI platform. We have continued momentum with our automaker customers, including six design wins and two wins for our generative AI solutions, as well as six major customer SOPs and two generative AI SOPs within the quarter. In addition, our transformation and cost reduction initiatives are having a solid impact on the business. As we look to the future, we believe we are well positioned to continue on our path to long-term, sustainable growth and profitability.”

    Cerence Key Performance Indicators
    To help investors gain further insight into the Cerence business and its performance, management provides a set of key performance indicators that includes:

    Key Performance Indicator1   Q1FY25  
    Percent of worldwide auto production with Cerence Technology (TTM)     51 %
    Change in number of Cerence connected cars shipped2 (TTM over prior year TTM)     5 %
    Change in Adjusted Total Billings (TTM over prior year TTM)     3 %
    (1) Please refer to the “Key Performance Indicators” section included elsewhere in this release for more information regarding the definitions and our use of key performance indicators.
    (2) Based on IHS Markit data, global auto production decreased 2% over the same time period ended on December 31, 2024.
       

    Second Quarter and Full Year Fiscal 2025 Outlook
    For the fiscal quarter ending March 31, 2025, revenue is expected to be in the range of $74 million to $77 million. This includes $20 million of projected Fixed License revenue expected to be signed during the quarter. Gross margins are projected between 74% and 76% and net income is projected in the range of $1 million to $5 million. Adjusted EBITDA is expected to be in the range of $18 million to $22 million.

    Guidance for the full fiscal year ending September 30, 2025 remains unchanged.

    The adjusted EBITDA guidance excludes amortization of acquired intangible assets, stock-based compensation, restructuring and other costs.

    Additional details regarding guidance will be provided during the earnings call.

    Cerence Conference Call and Webcast
    The company will host a live conference call and webcast with slides to discuss the results today at 5:00pm Eastern Time / 2:00pm Pacific Time. Interested investors and analysts are invited to dial into the conference call by registering here.

    Webcast access will also be available on the Investor Information section of the company’s website at https://www.cerence.com/investors/events-and-resources.

    A replay of the webcast can be accessed by visiting the company’s website 90 minutes following the conference call at https://www.cerence.com/investors/events-and-resources.

    Forward Looking Statements
    Statements in this press release regarding: Cerence’s future performance, results and financial condition; expected growth and profitability; outlook and momentum; transformation plans and cost efficiency initiatives, including the estimated net annualized cost savings; strategy; opportunities; business, industry and market trends; strategy regarding fixed contracts and its impact on financial results; backlog; revenue visibility; revenue timing and mix; demand for Cerence products; innovation and new product offerings, including AI technology; expected benefits of technology partnerships; cost efficiency initiatives; and management’s future expectations, estimates, assumptions, beliefs, goals, objectives, targets, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “goal,” “anticipates,” “projects,” “forecasts,” “expects,” “intends,” “continues,” “will,” “may,” or “estimates” or similar expressions) should also be considered to be forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risk, uncertainties and other factors, which may cause actual results or performance of the company to be materially different from any future results or performance expressed or implied by such forward-looking statements including but not limited to: the highly competitive and rapidly changing market in which we operate; adverse conditions in the automotive industry, the related supply chain and semiconductor shortage, or the global economy more generally; volatility in the political, legal and regulatory environment in which we operate, including trade, tariffs and other policies implemented by the new administration or actions taken by other countries in response; automotive production delays; changes in customer forecasts; the impacts of the COVID-19 pandemic on our and our customers’ businesses; the ongoing conflicts in Ukraine and the Middle East; our inability to control and successfully manage our expenses and cash position; our inability to deliver improved financial results from process optimization efforts and cost reduction actions; escalating pricing pressures from our customers; the impact on our business of the transition to a lower level of fixed contracts, including the failure to achieve such a transition; our failure to win, renew or implement service contracts; the cancellation or postponement of existing contracts; the loss of business from any of our largest customers; effects of customer defaults; our inability to successfully introduce new products, applications and services; our strategies to increase cloud offerings and deploy generative AI and large language models (LLMs); the inability to expand into adjacent markets; the inability to recruit and retain qualified personnel; disruptions arising from transitions in management personnel, including the transition to our new Chief Executive Officer; cybersecurity and data privacy incidents; failure to protect our intellectual property; defects or interruptions in service with respect to our products; fluctuating currency rates and interest rates; inflation; financial and credit market volatility; restrictions on our current and future operations under the terms of our debt, the use of cash to service or repay our debt; and our inability to generate sufficient cash from our operations; and the other factors discussed in our most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this document.

    Discussion of Non-GAAP Financial Measures
    We believe that providing the non-GAAP information in addition to the GAAP presentation, allows investors to view the financial results in the way management views the operating results. We further believe that providing this information allows investors to not only better understand our financial performance, but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance. The non-GAAP information should not be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP.

    We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. While our management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial statements.

    Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial statements, allows for greater transparency in the review of our financial and operational performance. In assessing the overall health of the business during the three months ended December 31, 2024 and 2023, our management has either included or excluded the following items in general categories, each of which is described below.

    Adjusted EBITDA.
    Adjusted EBITDA is defined as net income attributable to Cerence Inc. before net income (loss) attributable to income tax (benefit) expense, other income (expense) items, net, depreciation and amortization expense, and excluding amortization of acquired intangible assets, stock-based compensation, and restructuring and other costs, net or impairment charges related to fixed and intangible assets and gains or losses on the sale of long-lived assets, if any. From time to time we may exclude from Adjusted EBITDA the impact of events, gains, losses or other charges (such as significant legal settlements) that affect the period-to-period comparability of our operating performance. Other income (expense) items, net include interest expense, interest income, and other income (expense), net (as stated in our Condensed Consolidated Statement of Operations). Our management and Board of Directors use this financial measure to evaluate our operating performance. It is also a significant performance measure in our annual incentive compensation programs.

    Restructuring and other costs, net.
    Restructuring and other costs, net include restructuring expenses as well as other charges that are unusual in nature, are the result of unplanned events, and arise outside the ordinary course of our business such as employee severance costs, consulting costs relating to our transformation initiatives, and costs for consolidating duplicate facilities.

    Amortization of acquired intangible assets.
    We exclude the amortization of acquired intangible assets from non-GAAP expense and income measures. These amounts are inconsistent in amount and frequency and are significantly impacted by the timing and size of acquisitions. Providing a supplemental measure which excludes these charges allows management and investors to evaluate results “as-if” the acquired intangible assets had been developed internally rather than acquired and, therefore, provides a supplemental measure of performance in which our acquired intellectual property is treated in a comparable manner to our internally developed intellectual property. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Future acquisitions may result in the amortization of additional intangible assets.

    Non-cash expenses.
    We provide non-GAAP information relative to the following non-cash expenses: (i) stock-based compensation; and (ii) non-cash interest. These items are further discussed as follows:

    i) Stock-based compensation. Because of varying valuation methodologies, subjective assumptions and the variety of award types, we exclude stock-based compensation from our operating results. We evaluate performance both with and without these measures because compensation expense related to stock-based compensation is typically non-cash and awards granted are influenced by the Company’s stock price and other factors such as volatility that are beyond our control. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include such charges in operating plans. Stock-based compensation will continue in future periods.
    ii) Non-cash interest. We exclude non-cash interest because we believe that excluding this expense provides management, as well as other users of the financial statements, with a valuable perspective on the cash-based performance and health of the business, including the current near-term projected liquidity. Non-cash interest expense will continue in future periods.
       

    Other expenses.
    We exclude certain other expenses that result from unplanned events outside the ordinary course of continuing operations, in order to measure operating performance and current and future liquidity both with and without these expenses. By providing this information, we believe management and the users of the financial statements are better able to understand the financial results of what we consider to be our organic, continuing operations. Included in these expenses are items such as other charges (credits), net, (gains) losses from extinguishment of debt, and changes in indemnification assets corresponding with the release of pre-spin liabilities for uncertain tax positions.

    Adjustments to income tax provision.
    Adjustments to our GAAP income tax provision to arrive at non-GAAP net income is determined based on our non-GAAP pre-tax income. Additionally, as our non-GAAP profitability is higher based on the non-GAAP adjustments, we adjust the GAAP tax provision to remove valuation allowances and related effects based on the higher level of reported non-GAAP profitability. We also exclude from our non-GAAP tax provision certain discrete tax items as they occur.

    Key Performance Indicators
    We believe that providing key performance indicators (“KPIs”) allows investors to gain insight into the way management views the performance of the business. We further believe that providing KPIs allows investors to better understand information used by management to evaluate and measure such performance. KPIs should not be considered superior to, or a substitute for, operating results prepared in accordance with GAAP. In assessing the performance of the business during the three months ended December 31, 2024, our management has reviewed the following KPIs, each of which is described below:

    • Percent of worldwide auto production with Cerence Technology: The number of Cerence enabled cars shipped as compared to IHS Markit car production data.
    • Change in number of Cerence connected cars shipped: The year-over-year change in the number of cars shipped with Cerence connected solutions. Amounts calculated on a TTM basis.
    • Change in Adjusted total billings YoY (TTM): The year over year change in total billings excluding Professional Services, prepay billings and adjusted for prepay consumption.

    ____________

    See the tables at the end of this press release for non-GAAP reconciliations to the most directly comparable GAAP measures.

    To learn more about Cerence AI, visit www.cerence.ai, and follow the company on LinkedIn.

    About Cerence Inc.
    Cerence Inc. (NASDAQ: CRNC) is a global industry leader in creating intuitive, seamless, AI-powered experiences across automotive and transportation. Leveraging decades of innovation and expertise in voice, generative AI, and large language models, Cerence powers integrated experiences that create safer, more connected, and more enjoyable journeys for drivers and passengers alike. With more than 500 million cars shipped with Cerence technology, the company partners with leading automakers, transportation OEMs, and technology companies to advance the next generation of user experiences. Cerence is headquartered in Burlington, Massachusetts, with operations globally and a worldwide team dedicated to pushing the boundaries of AI innovation. For more information, visit www.cerence.ai.

    Contact Information
    Investor Relations | Email: investorrelations@cerence.com 

     
    CERENCE INC.
    Condensed Consolidated Statements of Operations
    (in thousands, except per share data)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    Revenues:            
    License   $ 22,725     $ 20,823  
    Connected services     13,707       96,820  
    Professional services     14,464       20,692  
    Total revenues     50,896       138,335  
    Cost of revenues:            
    License     1,782       1,604  
    Connected services     6,311       7,303  
    Professional services     9,731       17,325  
    Amortization of intangible assets     —       103  
    Total cost of revenues     17,824       26,335  
    Gross profit     33,072       112,000  
    Operating expenses:            
    Research and development     20,869       33,306  
    Sales and marketing     4,766       6,071  
    General and administrative     12,754       12,793  
    Amortization of intangible assets     554       545  
    Restructuring and other costs, net     11,062       705  
    Total operating expenses     50,005       53,420  
    (Loss) income from operations     (16,933 )     58,580  
    Interest income     1,437       1,432  
    Interest expense     (3,393 )     (3,236 )
    Other income, net     272       1,422  
    (Loss) income before income taxes     (18,617 )     58,198  
    Provision for income taxes     5,671       34,341  
    Net (loss) income   $ (24,288 )   $ 23,857  
    Net (loss) income per share:            
    Basic   $ (0.57 )   $ 0.58  
    Diluted   $ (0.57 )   $ 0.53  
    Weighted-average common share outstanding:            
    Basic     42,897       41,186  
    Diluted     42,897       49,255  
                     
     
    CERENCE INC.
    Condensed Consolidated Balance Sheets
    (in thousands, except per share amounts)
                 
        December 31,     September 30,  
        2024     2024  
        (Unaudited)        
    ASSETS            
    Current assets:            
    Cash and cash equivalents   $ 104,103       121,485  
    Marketable securities     3,889       5,502  
    Accounts receivable, net of allowances of $53 and $1,613     47,671       62,755  
    Deferred costs     4,739       5,286  
    Prepaid expenses and other current assets     39,670       70,481  
    Total current assets     200,072       265,509  
    Long-term marketable securities     2,552       3,453  
    Property and equipment, net     29,371       30,139  
    Deferred costs     15,539       18,051  
    Operating lease right of use assets     13,156       12,879  
    Goodwill     288,886       296,858  
    Intangible assets, net     1,059       1,706  
    Deferred tax assets     46,035       51,398  
    Other assets     20,858       22,365  
    Total assets   $ 617,528     $ 702,358  
    LIABILITIES AND STOCKHOLDERS’ EQUITY            
    Current liabilities:            
    Accounts payable   $ 7,609     $ 3,959  
    Deferred revenue     47,626       52,822  
    Short-term operating lease liabilities     3,828       4,528  
    Short-term debt     59,954       87,094  
    Accrued expenses and other current liabilities     32,967       68,405  
    Total current liabilities     151,984       216,808  
    Long-term debt     196,208       194,812  
    Deferred revenue, net of current portion     113,444       114,354  
    Long-term operating lease liabilities     10,071       8,803  
    Other liabilities     25,119       26,484  
    Total liabilities     496,826       561,261  
    Stockholders’ Equity:            
    Common stock, $0.01 par value, 560,000 shares authorized; 42,988 and 41,924 shares issued and outstanding, respectively     430       419  
    Accumulated other comprehensive loss     (29,785 )     (25,912 )
    Additional paid-in capital     1,096,085       1,088,330  
    Accumulated deficit     (946,028 )     (921,740 )
    Total stockholders’ equity     120,702       141,097  
    Total liabilities and stockholders’ equity   $ 617,528     $ 702,358  
                     
     
    CERENCE INC.
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    Cash flows from operating activities:            
    Net (loss) income   $ (24,288 )   $ 23,857  
    Adjustments to reconcile net (loss) income to net cash provided by (used in) operations:            
    Depreciation and amortization     2,445       2,686  
    Provision for expected credit loss reserve     207       –  
    Stock-based compensation     7,771       8,380  
    Non-cash interest expense     1,861       1,468  
    Gain on debt extinguishment     (327 )     –  
    Deferred tax provision     4,927       30,298  
    Unrealized foreign currency transaction losses (gains)     1,997       (2,012 )
    Other, net     (33 )     382  
    Changes in operating assets and liabilities:            
    Accounts receivable     8,800       4,933  
    Prepaid expenses and other assets     27,201       1,170  
    Deferred costs     1,859       2,589  
    Accounts payable     3,814       2,382  
    Accrued expenses and other liabilities     (33,087 )     3,712  
    Deferred revenue     6,107       (82,660 )
    Net cash provided by (used in) operating activities     9,254       (2,815 )
    Cash flows from investing activities:            
    Capital expenditures     (1,360 )     (931 )
    Sale and maturities of marketable securities     2,493       2,442  
    Other investing activities     (374 )     (322 )
    Net cash provided by investing activities     759       1,189  
    Cash flows from financing activities:            
    Principal payments of short-term debt     (26,964 )     –  
    Common stock repurchases for tax withholdings for net settlement of equity awards     (1,369 )     (6,209 )
    Principal payment of lease liabilities arising from a finance lease     (115 )     (122 )
    Proceeds from the issuance of common stock     1,364       6,201  
    Net cash used in financing activities     (27,084 )     (130 )
    Effects of exchange rate changes on cash and cash equivalents     (311 )     (662 )
    Net change in cash and cash equivalents     (17,382 )     (2,418 )
    Cash and cash equivalents at beginning of period     121,485       101,154  
    Cash and cash equivalents at end of period   $ 104,103     $ 98,736  
                     
     
    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
    (unaudited – in thousands)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    GAAP revenue   $ 50,896     $ 138,335  
                 
    GAAP gross profit   $ 33,072     $ 112,000  
    Stock-based compensation     490       641  
    Amortization of intangible assets     –       103  
    Non-GAAP gross profit   $ 33,562     $ 112,744  
    GAAP gross margin     65.0 %     81.0 %
    Non-GAAP gross margin     65.9 %     81.5 %
                 
    GAAP operating (loss) income   $ (16,933 )   $ 58,580  
    Stock-based compensation*     4,808       8,380  
    Amortization of intangible assets     554       648  
    Restructuring and other costs, net*     11,062       705  
    Non-GAAP operating (loss) income   $ (509 )   $ 68,313  
    GAAP operating margin     -33.3 %     42.3 %
    Non-GAAP operating margin     -1.0 %     49.4 %
                 
    GAAP net (loss) income   $ (24,288 )   $ 23,857  
    Stock-based compensation*     4,808       8,380  
    Amortization of intangible assets     554       648  
    Restructuring and other costs, net*     11,062       705  
    Depreciation     1,891       2,038  
    Total other expense, net     (1,684 )     (382 )
    Provision for income taxes     5,671       34,341  
    Adjusted EBITDA   $ 1,382     $ 70,351  
    GAAP net (loss) income margin     -47.7 %     17.2 %
    Adjusted EBITDA margin     2.7 %     50.9 %
    * – $3.0 million in stock-based compensation is included in Restructuring and other costs, net for Q1’25.            
                 
     
    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited – in thousands, except per share data)
           
        Three Months Ended  
        December 31,  
        2024     2023  
    GAAP net (loss) income   $ (24,288 )   $ 23,857  
    Stock-based compensation*     4,808       8,380  
    Amortization of intangible assets     554       648  
    Restructuring and other costs, net*     11,062       705  
    Gain on debt extinguishment     (327 )     –  
    Non-cash interest expense     1,861       1,468  
    Other     (33 )     (27 )
    Adjustments to income tax expense     4,895       19,259  
    Non-GAAP net (loss) income   $ (1,468 )   $ 54,290  
                 
    Adjusted EPS:            
    GAAP Numerator:            
    Net (loss) income attributed to common shareholders – basic   $ (24,288 )   $ 23,857  
    Interest on the Notes, net of tax     –       2,250  
    Net (loss) income attributed to common shareholders – diluted   $ (24,288 )   $ 26,107  
                 
    Non-GAAP Numerator:            
    Net (loss) income attributed to common shareholders – basic   $ (1,468 )   $ 54,290  
    Interest on the Notes, net of tax     –       1,120  
    Net (loss) income attributed to common shareholders – diluted   $ (1,468 )   $ 55,410  
                 
    GAAP Denominator:            
    Weighted-average common shares outstanding – basic     42,897       41,186  
    Adjustment for diluted shares     –       8,069  
    Weighted-average common shares outstanding – diluted     42,897       49,255  
                 
    Non-GAAP Denominator:            
    Weighted-average common shares outstanding- basic     42,897       41,186  
    Adjustment for diluted shares     –       8,069  
    Weighted-average common shares outstanding – diluted     42,897       49,255  
                 
    GAAP net (loss) income per share – diluted   $ (0.57 )   $ 0.53  
    Non-GAAP net (loss) income per share – diluted   $ (0.03 )   $ 1.12  
                 
    GAAP net cash provided by (used in) operating activities   $ 9,254     $ (2,815 )
    Capital expenditures     (1,360 )     (931 )
    Free Cash Flow   $ 7,894     $ (3,746 )
    * – $3.0 million in stock-based compensation is included in Restructuring and other costs, net for Q1’25.            
                 
     
    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited – in thousands)
                 
        Q2 2025     FY2025  
        Low     High     Low     High  
    GAAP revenue   $ 74,000     $ 77,000     $ 236,000     $ 247,000  
                             
    GAAP gross profit   $ 54,700     $ 58,700     $ 158,400     $ 169,400  
    Stock-based compensation     700       700       2,500       2,500  
    Amortization of intangible assets     –       –       –       –  
    Non-GAAP gross profit   $ 55,400     $ 59,400     $ 160,900     $ 171,900  
    GAAP gross margin     74 %     76 %     67 %     69 %
    Non-GAAP gross margin     75 %     77 %     68 %     70 %
                             
    GAAP operating income (loss)   $ 7,100     $ 11,100     $ (27,100 )   $ (16,100 )
    Stock-based compensation     7,000       7,000       22,500       22,500  
    Amortization of intangible assets     500       500       1,600       1,600  
    Restructuring and other costs, net     1,300       1,300       8,100       8,100  
    Non-GAAP operating income   $ 15,900     $ 19,900     $ 5,100     $ 16,100  
    GAAP operating margin     10 %     14 %     -11 %     -7 %
    Non-GAAP operating margin     21 %     26 %     2 %     7 %
                             
    GAAP net income (loss)   $ 1,200     $ 5,200     $ (39,600 )   $ (28,600 )
    Stock-based compensation     7,000       7,000       22,500       22,500  
    Amortization of intangible assets     500       500       1,600       1,600  
    Restructuring and other costs, net     1,300       1,300       8,100       8,100  
    Depreciation     1,900       1,900       10,200       10,200  
    Total other expense, net     (1,300 )     (1,300 )     (5,100 )     (5,100 )
    Provision for income taxes     4,600       4,600       7,400       7,400  
    Adjusted EBITDA   $ 17,800     $ 21,800     $ 15,300     $ 26,300  
    GAAP net income (loss) margin     2 %     7 %     -17 %     -12 %
    Adjusted EBITDA margin     24 %     28 %     6 %     11 %
                                     
     
    CERENCE INC.
    Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (cont.)
    (unaudited – in thousands)
                 
        Q2 2025     FY2025  
        Low     High     Low     High  
    GAAP net income (loss)   $ 1,200     $ 5,200     $ (39,600 )   $ (28,600 )
    Stock-based compensation     7,000       7,000       22,500       22,500  
    Amortization of intangibles     500       500       1,600       1,600  
    Restructuring and other costs, net     1,300       1,300       8,100       8,100  
    Non-cash interest expense     1,500       1,500       5,500       5,500  
    Other     –       –       (100 )     (100 )
    Adjustments to income tax expense     1,500       1,500       (4,600 )     (4,600 )
    Non-GAAP net income (loss)   $ 13,000     $ 17,000     $ (6,600 )   $ 4,400  
                             
    Adjusted EPS:                        
    GAAP Numerator:                        
    Net income (loss) attributed to common shareholders – basic and diluted   $ 1,200     $ 5,200     $ (39,600 )   $ (28,600 )
                             
    Non-GAAP Numerator:                        
    Net income (loss) attributed to common shareholders – basic   $ 13,000     $ 17,000     $ (6,600 )   $ 4,400  
    Interest on the Notes, net of tax     900       900       –       –  
    Net income (loss) attributed to common shareholders – diluted   $ 13,900     $ 17,900     $ (6,600 )   $ 4,400  
                             
    GAAP Denominator:                        
    Weighted-average common shares outstanding – basic     43,000       43,000       43,000       43,000  
    Adjustment for diluted shares     100       100       –       –  
    Weighted-average common shares outstanding – diluted     43,100       43,100       43,000       43,000  
                             
    Non-GAAP Denominator:                        
    Weighted-average common shares outstanding- basic     43,000       43,000       43,000       43,000  
    Adjustment for diluted shares     6,800       6,800       –       100  
    Weighted-average common shares outstanding – diluted     49,800       49,800       43,000       43,100  
                             
    GAAP net income (loss) per share – diluted   $ 0.03     $ 0.12     $ (0.92 )   $ (0.67 )
    Non-GAAP net income (loss) per share – diluted   $ 0.28     $ 0.36     $ (0.15 )   $ 0.10  
                             
    GAAP net cash provided by operating activities               $ 34,000     $ 40,000  
    Capital expenditures                 (14,000 )     (10,000 )
    Free Cash Flow               $ 20,000     $ 30,000  
                                 

    The MIL Network –

  • MIL-OSI: Fortinet Reports Fourth Quarter and Full Year 2024 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    Fourth Quarter 2024 Highlights

    • Total revenue of $1.66 billion, up 17% year over year
    • Product revenue of $574 million, up 18% year over year
    • Billings of $2.00 billion, up 7% year over year1
    • Record GAAP operating margin of 35%
    • Record Non-GAAP operating margin of 39%1
    • Unified SASE ARR2up 28% and Security Operations ARR2up 32%, year over year
    • Ranked #7 on the Forbes Most Trusted Companies in America 2025 list, the only cybersecurity company in the top 50

    Full Year 2024 Highlights

    • Total revenue of $5.96 billion, up 12% year over year
    • Service revenue of $4.05 billion, up 20% year over year
    • Record GAAP operating margin of 30%
    • Record Non-GAAP operating margin of 35%1
    • Remaining performance obligations of $6.42 billion, up 12% year over year
    • Cash flow from operations of $2.26 billion
    • Free cash flow of $1.88 billion1
    • Exceeded the ‘Rule of 45’ for the fifth consecutive year

    SUNNYVALE, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) — Fortinet® (Nasdaq: FTNT), a global cybersecurity leader driving the convergence of networking and security, today announced financial results for the fourth quarter of 2024 and full year ended December 31, 2024.

    “In the fourth quarter, we successfully balanced growth and profitability as our non-GAAP operating margin increased 720 basis points year-over-year to a company record of 39%, while revenue grew 17%,” said Ken Xie, Founder, Chairman and Chief Executive Officer of Fortinet. “We continue to execute our strategy of investing in the high-growth Unified SASE and Security Operations markets, while strengthening our position in Secure Networking. Our customers are increasingly recognizing the benefits of a single-vendor approach to SASE, and we expect to emerge as a leader in this space, being the only company to natively develop all SASE functions within a unified operating system, FortiOS, which seamlessly integrates networking and security capabilities.”

    Financial Summary for the Fourth Quarter of 2024

    • Revenue: Total revenue was $1.66 billion for the fourth quarter of 2024, an increase of 17.3% compared to $1.42 billion for the same quarter of 2023.
    • Service Revenue: Service revenue was $1.09 billion for the fourth quarter of 2024, an increase of 17.2% compared to $927.0 million for the same quarter of 2023.
    • Product Revenue: Product revenue was $574.0 million for the fourth quarter of 2024, an increase of 17.6% compared to $488.1 million for the same quarter of 2023.
    • Billings1: Total billings were $2.00 billion for the fourth quarter of 2024, an increase of 7.4% compared to $1.86 billion for the same quarter of 2023.
    • Unified SASE ARR2: Unified SASE ARR was $1.12 billion for the fourth quarter of 2024, an increase of 27.9% compared to $875.3 million for the same quarter of 2023.
    • Security Operations ARR2: Security Operations ARR was $422.4 million for the fourth quarter of 2024, an increase of 32.2% compared to $319.6 million for the same quarter of 2023.
    • GAAP Operating Income and Margin: GAAP operating income was $574.1 million for the fourth quarter of 2024, representing a GAAP operating margin of 34.6%. GAAP operating income was $385.4 million for the same quarter of 2023, representing a GAAP operating margin of 27.2%.
    • Non-GAAP Operating Income and Margin1: Non-GAAP operating income was $650.9 million for the fourth quarter of 2024, representing a non-GAAP operating margin of 39.2%. Non-GAAP operating income was $453.5 million for the same quarter of 2023, representing a non-GAAP operating margin of 32.0%.
    • GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $526.2 million for the fourth quarter of 2024, compared to GAAP net income of $310.9 million for the same quarter of 2023. GAAP diluted net income per share was $0.68 for the fourth quarter of 2024, based on 775.2 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.40 for the same quarter of 2023, based on 772.3 million diluted weighted-average shares outstanding.
    • Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $571.5 million for the fourth quarter of 2024, compared to non-GAAP net income of $392.0 million for the same quarter of 2023. Non-GAAP diluted net income per share was $0.74 for the fourth quarter of 2024, based on 775.2 million diluted weighted-average shares outstanding, compared to $0.51 for the same quarter of 2023, based on 772.3 million diluted weighted-average shares outstanding.
    • Cash Flow: Cash flow from operations was $477.6 million for the fourth quarter of 2024, compared to $191.7 million for the same quarter of 2023.
    • Free Cash Flow1: Free cash flow was $380.0 million for the fourth quarter of 2024, compared to $164.8 million for the same quarter of 2023.

    Financial Summary for the Full Year 2024

    • Revenue: Total revenue was $5.96 billion for 2024, an increase of 12.3% compared to $5.30 billion in 2023.
    • Service Revenue: Service revenue was $4.05 billion for 2024, an increase of 19.8% compared to $3.38 billion in 2023.
    • Product Revenue: Product revenue was $1.91 billion for 2024, a decrease of 1.0% compared to $1.93 billion in 2023.
    • Billings1: Total billings were $6.53 billion for 2024, an increase of 2.1% compared to $6.40 billion in 2023.
    • Remaining performance obligations: Remaining performance obligations were $6.42 billion as of December 31, 2024, an increase of 11.7% compared to $5.75 billion as of December 31, 2023.
    • Deferred Revenue: Total deferred revenue was $6.36 billion as of December 31, 2024, an increase of 10.9% compared to $5.74 billion as of December 31, 2023.
    • GAAP Operating Income and Margin: GAAP operating income was $1.80 billion for 2024, representing a GAAP operating margin of 30.3%. GAAP operating income was $1.24 billion for 2023, representing a GAAP operating margin of 23.4%.
    • Non-GAAP Operating Income and Margin1: Non-GAAP operating income was $2.09 billion for 2024, representing a non-GAAP operating margin of 35.0%. Non-GAAP operating income was $1.51 billion for 2023, representing a non-GAAP operating margin of 28.4%.
    • GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $1.75 billion for 2024, compared to GAAP net income of $1.15 billion for 2023. GAAP diluted net income per share was $2.26 for 2024, based on 771.9 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $1.46 for 2023, based on 788.2 million diluted weighted-average shares outstanding.
    • Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $1.83 billion for 2024, compared to non-GAAP net income of $1.29 billion for 2023. Non-GAAP diluted net income per share was $2.37 for 2024, based on 771.9 million diluted weighted-average shares outstanding, compared to $1.63 for 2023, based on 788.2 million diluted weighted-average shares outstanding.
    • Cash Flow: Cash flow from operations was $2.26 billion in 2024 compared to $1.94 billion in 2023.
    • Free Cash Flow1: Free cash flow was $1.88 billion in 2024, compared to $1.73 billion in 2023.

    Guidance

    For the first quarter of 2025, Fortinet currently expects:

    • Revenue in the range of $1.500 billion to $1.560 billion
    • Billings in the range of $1.520 billion to $1.600 billion
    • Non-GAAP gross margin in the range of 80.0% to 81.0%
    • Non-GAAP operating margin in the range of 30.0% to 31.0%
    • Diluted non-GAAP net income per share in the range of $0.52 to $0.54, assuming a non-GAAP effective tax rate of 18%. This assumes a diluted share count of 774 million to 780 million.

    For the fiscal year 2025, Fortinet currently expects:

    • Revenue in the range of $6.650 billion to $6.850 billion
    • Service revenue in the range of $4.575 billion to $4.725 billion
    • Billings in the range of $7.200 billion to $7.400 billion
    • Non-GAAP gross margin in the range of 79.0% to 81.0%
    • Non-GAAP operating margin in the range of 31.0% to 33.0%
    • Diluted non-GAAP net income per share in the range of $2.41 to $2.47, assuming a non-GAAP effective tax rate of 18%. This assumes a diluted share count of 773 million to 783 million.

    These statements are forward looking and actual results may differ materially. Refer to the Forward-Looking Statements section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

    Our guidance with respect to non-GAAP financial measures excludes stock-based compensation, amortization of acquired intangible assets, charges in connection with litigation settlement, gain on intellectual property matters, gain on bargain purchase related to acquisition, non-cash charge of impairment on an equity method investment and a tax adjustment required for an effective tax rate on a non-GAAP basis, which differs from the GAAP effective tax rate. We have not reconciled our guidance with respect to non-GAAP financial measures to the corresponding GAAP measures because certain items that impact these measures are uncertain or out of our control, or cannot be reasonably predicted. Accordingly, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures is not available without unreasonable effort.

    1 A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures”.
    2 ARR is defined as the annualized value of renewable / recurring customer agreements as of the measurement date, assuming any contract that expires during the next 12 months is renewed at its existing value.

    Conference Call Details

    Fortinet will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss the earnings results. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of Fortinet’s website at https://investor.fortinet.com and a replay will be archived and accessible at https://investor.fortinet.com/events-and-presentations.

    First Quarter 2025 Conference Participation Schedule:

    • Morgan Stanley Technology, Media & Telecom Conference
      March 4, 2025

    Members of Fortinet’s management team are expected to present at this conference and discuss the latest company strategies and initiatives. Fortinet’s conference presentations are expected to be available via webcast on the company’s website. To access the most updated information, pre-register and listen to the webcast of each event, please visit the Investor Presentation & Events page of Fortinet’s website at https://investor.fortinet.com/events-and-presentations. The schedule is subject to change.

    About Fortinet (www.fortinet.com)

    Fortinet (Nasdaq: FTNT) is a driving force in the evolution of cybersecurity and the convergence of networking and security. Our mission is to secure people, devices and data everywhere, and today we deliver cybersecurity everywhere our customers need it with the largest integrated portfolio of over 50 enterprise-grade products. Well over half a million customers trust Fortinet’s solutions, which are among the most deployed, most patented and most validated in the industry. The Fortinet Training Institute, one of the largest and broadest training programs in the industry, is dedicated to making cybersecurity training and new career opportunities available to everyone. Collaboration with esteemed organizations from both the public and private sectors, including Computer Emergency Response Teams (“CERTs”), government entities, and academia, is a fundamental aspect of Fortinet’s commitment to enhance cyber resilience globally. FortiGuard Labs, Fortinet’s elite threat intelligence and research organization, develops and utilizes leading-edge machine learning and AI technologies to provide customers with timely and consistently top-rated protection and actionable threat intelligence. Learn more at https://www.fortinet.com, the Fortinet Blog or FortiGuard Labs.

    Copyright © 2025 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and common law trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet’s trademarks include, but are not limited to, the following: Fortinet, the Fortinet logo, FortiGate, FortiOS, FortiGuard, FortiCare, FortiAnalyzer, FortiManager, FortiASIC, FortiClient, FortiCloud, FortiMail, FortiSandbox, FortiADC, FortiAgent, FortiAI, FortiAIOps, FortiAntenna, FortiAP, FortiAPCam, FortiAppSec, FortiAuthenticator, FortiCache, FortiCall, FortiCam, FortiCamera, FortiCarrier, FortiCART, FortiCASB, FortiCentral, FortiCNP, FortiConnect, FortiController, FortiConverter, FortiCSPM, FortiCWP, FortiDAST, FortiDATA, FortiDB, FortiDDoS, FortiDeceptor, FortiDeploy, FortiDevice, FortiDevSec, FortiDLP, FortiEdge, FortiEDR, FortiEndpoint, FortiExplorer, FortiExtender, FortiFirewall, FortiFlex, FortiFone, FortiGSLB, FortiGuest, FortiHypervisor, FortiInsight, FortiIsolator, FortiLAN, FortiLink, FortiMonitor, FortiNAC, FortiNDR, FortiPAM, FortiPenTest, FortiPhish, FortiPoint, FortiPolicy, FortiPortal, FortiPresence, FortiProxy, FortiRecon, FortiRecorder, FortiSASE, FortiScanner, FortiSDNConnector, FortiSEC, FortiSIEM, FortiSMS, FortiSOAR, FortiSRA, FortiStack, FortiSwitch, FortiTester, FortiTIP, FortiToken, FortiTrust, FortiVoice, FortiWAN, FortiWeb, FortiWiFi, FortiWLC, FortiWLM, FortiXDR and Lacework FortiCNAPP. Other trademarks belong to their respective owners. Fortinet has not independently verified statements or certifications herein attributed to third parties and Fortinet does not independently endorse such statements. Notwithstanding anything to the contrary herein, nothing herein constitutes a warranty, guarantee, contract, binding specification or other binding commitment by Fortinet or any indication of intent related to a binding commitment, and performance and other specification information herein may be unique to certain environments.

    FTNT-F

    Forward-Looking Statements

    This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding any indications related to future growth and market share gains, our strategy going forward, and guidance and expectations around future financial results, including guidance and expectations for the first quarter of 2025 and full year 2025, and any statements regarding our market opportunity and market size, and business momentum. Although we attempt to be accurate in making forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based such that actual results are materially different from our forward-looking statements in this release. Important factors that could cause results to differ materially from the statements herein include the following: general economic risks, including those caused by economic challenges, a possible economic downturn or recession and the effects of inflation or stagflation, rising interest rates or reduced information technology spending; supply chain challenges; negative impacts from the ongoing war in Ukraine and its related macroeconomic effects and our decision to reduce operations in Russia; competitiveness in the security market; the dynamic nature of the security market and its products and services; specific economic risks worldwide and in different geographies, and among different customer segments; uncertainty regarding demand and increased business and renewals from existing customers; sales execution risks, including risks in connection with the timing and completion of large strategic deals; uncertainties around continued success in sales growth and market share gains; uncertainties in market opportunities and the market size; actual or perceived vulnerabilities in our supply chain, products or services, and any actual or perceived breach of our network or our customers’ networks; longer sales cycles, particularly for larger enterprise, service providers, government and other large organization customers; the effectiveness of our salesforce and failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; risks associated with integrating acquisitions and changes in circumstances and plans associated therewith, including, among other risks, changes in plans related to product and services integrations, product and services plans and sales strategies; sales and marketing execution risks; execution risks around new product development and introductions and innovation; litigation and disputes and the potential cost, distraction and damage to sales and reputation caused thereby or by other factors; cybersecurity threats, breaches and other disruptions; market acceptance of new products and services; the ability to attract and retain personnel; changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive, including advances in artificial intelligence; risks associated with the adoption of, and demand for, our products and services in general and by specific customer segments, including those caused by competition and pricing pressure; excess product inventory for any reason, including those caused by the effects of increased inflation and interest rates in certain geographies and the war in Ukraine; risks associated with business disruption caused by natural disasters and health emergencies such as earthquakes, fires, power outages, typhoons, floods, health epidemics and viruses, and by manmade events such as civil unrest, labor disruption, international trade disputes, international conflicts such as the war in Ukraine or tensions between China and Taiwan, terrorism, wars, and critical infrastructure attacks; tariffs, trade disputes and other trade barriers, and negative impact on sales based on geo-political dynamics and disputes and protectionist policies, including the impact of any future shutdowns of the U.S. government and the transition in administrations; and the other risk factors set forth from time to time in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission (“SEC”), copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events.

    Non-GAAP Financial Measures

    We have provided in this release financial information that has not been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). These non-GAAP financial and liquidity measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with peer companies, many of which present similar non-GAAP financial measures to investors.

    Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables below.

    Billings (non-GAAP). We define billings as revenue recognized in accordance with GAAP plus the change in deferred revenue from the beginning to the end of the period less any deferred revenue balances acquired from business combination(s) during the period. We consider billings to be a useful metric for management and investors because billings drive current and future revenue, which is an important indicator of the health and viability of our business. There are a number of limitations related to the use of billings instead of GAAP revenue. First, billings include amounts that have not yet been recognized as revenue and are impacted by the term of security and support agreements. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures. Management accounts for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with GAAP revenue.

    Free cash flow (non-GAAP). We define free cash flow as net cash provided by operating activities minus purchases of property and equipment. We believe free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures, can be used for strategic opportunities, including repurchasing outstanding common stock, investing in our business, making strategic acquisitions and strengthening the balance sheet. A limitation of using free cash flow rather than the GAAP measures of cash provided by or used in operating activities, investing activities, and financing activities is that free cash flow does not represent the total increase or decrease in the cash and cash equivalents balance for the period because it excludes investing activities other than capital expenditures and cash flows from financing activities. Management accounts for this limitation by providing information about our capital expenditures and other investing and financing activities on the face of the cash flow statement and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K and by presenting cash flows from investing and financing activities in our reconciliation of free cash flow. In addition, it is important to note that other companies, including companies in our industry, may not use free cash flow, may calculate free cash flow in a different manner than we do or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a comparative measure.

    Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income plus stock-based compensation, amortization of acquired intangible assets and charges in connection with litigation settlement, less gain on intellectual property matter and, when applicable, other significant non-recurring items in a given quarter. Non-GAAP operating margin is defined as non-GAAP operating income divided by GAAP revenue. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the items noted above so that our management and investors can compare our recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP operating income instead of operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes the items noted above. Second, the components of the costs that we exclude from our calculation of non-GAAP operating income may differ from the components that peer companies exclude when they report their non-GAAP results of operations. Management accounts for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.

    Non-GAAP net income and diluted net income per share. We define non-GAAP net income as net income plus the items noted above under non-GAAP operating income and operating margin. In addition, we adjust non-GAAP net income and diluted net income per share for a gain on bargain purchase related to acquisition, a non-cash charge of impairment on an equity method investment and a tax adjustment required for an effective tax rate on a non-GAAP basis, which differs from the GAAP effective tax rate. We define non-GAAP diluted net income per share as non-GAAP net income divided by the non-GAAP diluted weighted-average shares outstanding. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income and non-GAAP operating margin. However, in order to provide a more complete picture of our recurring core business operating results, we include in non-GAAP net income and non-GAAP diluted net income per share, the tax adjustment required resulting in an effective tax rate on a non-GAAP basis, which often differs from the GAAP tax rate. We believe the non-GAAP effective tax rates we use are reasonable estimates of normalized tax rates for our current and prior fiscal years under our global operating structure. The same limitations described above regarding our use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP diluted net income per share. We account for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP diluted net income per share and evaluating non-GAAP net income and non-GAAP diluted net income per share together with net income and diluted net income per share calculated in accordance with GAAP.

    FORTINET, INC.

    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited, in millions)
     
      December 31,
    2024    		   December 31,
    2023
    ASSETS      
    CURRENT ASSETS:      
    Cash and cash equivalents $ 2,875.9     $ 1,397.9  
    Short-term investments   1,126.4       1,021.5  
    Marketable equity securities   64.2       21.0  
    Accounts receivable—net   1,463.4       1,402.0  
    Inventory   315.5       484.8  
    Prepaid expenses and other current assets   126.1       101.1  
    Total current assets   5,971.5       4,428.3  
    PROPERTY AND EQUIPMENT—NET   1,349.5       1,044.4  
    DEFERRED CONTRACT COSTS   622.9       605.6  
    DEFERRED TAX ASSETS   1,335.6       868.8  
    GOODWILL AND OTHER INTANGIBLE ASSETS—NET   350.4       161.8  
    OTHER ASSETS   133.2       150.0  
    TOTAL ASSETS $ 9,763.1     $ 7,258.9  
    LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)      
    CURRENT LIABILITIES:      
    Accounts payable $ 190.9     $ 204.3  
    Accrued liabilities   337.9       423.7  
    Accrued payroll and compensation   255.7       242.3  
    Deferred revenue   3,276.2       2,848.7  
    Total current liabilities   4,060.7       3,719.0  
    DEFERRED REVENUE   3,084.7       2,886.3  
    LONG-TERM DEBT   994.3       992.3  
    OTHER LIABILITIES   129.6       124.7  
    Total liabilities   8,269.3       7,722.3  
    COMMITMENTS AND CONTINGENCIES      
    STOCKHOLDERS’ EQUITY (DEFICIT):      
    Common stock   0.8       0.8  
    Additional paid-in capital   1,636.2       1,416.4  
    Accumulated other comprehensive loss   (26.1 )     (18.9 )
    Accumulated deficit   (117.1 )     (1,861.7 )
    Total stockholders’ equity (deficit)   1,493.8       (463.4 )
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 9,763.1     $ 7,258.9  
    FORTINET, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited, in millions, except per share amounts)
     
      Three Months Ended   Year Ended
      December 31,
    2024    		   December 31,
    2023    		   December 31,
    2024    		   December 31,
    2023
    REVENUE:              
    Product $ 574.0     $ 488.1     $ 1,908.7     $ 1,927.3  
    Service   1,086.1       927.0       4,047.1       3,377.5  
    Total revenue   1,660.1       1,415.1       5,955.8       5,304.8  
    COST OF REVENUE:              
    Product   178.0       197.2       652.0       763.6  
    Service   136.5       118.7       505.6       473.6  
    Total cost of revenue   314.5       315.9       1,157.6       1,237.2  
    GROSS PROFIT:              
    Product   396.0       290.9       1,256.7       1,163.7  
    Service   949.6       808.3       3,541.5       2,903.9  
    Total gross profit   1,345.6       1,099.2       4,798.2       4,067.6  
    OPERATING EXPENSES:              
    Research and development   191.1       152.5       716.8       613.8  
    Sales and marketing   526.5       507.4       2,044.8       2,006.0  
    General and administrative   55.1       55.1       237.8       211.3  
    Gain on intellectual property matter   (1.2 )     (1.2 )     (4.6 )     (4.6 )
    Total operating expenses   771.5       713.8       2,994.8       2,826.5  
    OPERATING INCOME   574.1       385.4       1,803.4       1,241.1  
    INTEREST INCOME   42.3       30.5       155.2       119.7  
    INTEREST EXPENSE   (4.9 )     (5.4 )     (20.0 )     (21.0 )
    GAIN ON BARGAIN PURCHASE   —       —       106.3       —  
    OTHER INCOME (EXPENSE)—NET   6.9       5.1       13.6       (6.1 )
    INCOME BEFORE INCOME TAXES AND LOSS FROM EQUITY METHOD INVESTMENTS   618.4       415.6       2,058.5       1,333.7  
    PROVISION FOR INCOME TAXES   86.7       95.2       283.9       143.8  
    LOSS FROM EQUITY METHOD INVESTMENTS   (5.5 )     (9.5 )     (29.4 )     (42.1 )
    NET INCOME $ 526.2     $ 310.9     $ 1,745.2     $ 1,147.8  
    Net income per share:              
    Basic $ 0.69     $ 0.41     $ 2.28     $ 1.47  
    Diluted $ 0.68     $ 0.40     $ 2.26     $ 1.46  
    Weighted-average shares outstanding:              
    Basic   766.5       764.9       764.4       778.6  
    Diluted   775.2       772.3       771.9       788.2  
    FORTINET, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited, in millions)
     
      Year Ended
      December 31,
    2024    		   December 31,
    2023
    CASH FLOWS FROM OPERATING ACTIVITIES:      
    Net income $ 1,745.2     $ 1,147.8  
    Adjustments to reconcile net income to net cash provided by operating activities:      
    Stock-based compensation   257.9       249.0  
    Amortization of deferred contract costs   293.7       266.3  
    Depreciation and amortization   122.8       113.4  
    Amortization of investment discounts   (48.8 )     (27.7 )
    Loss from equity method investments   29.4       42.1  
    Gain on bargain purchase   (106.3 )     —  
    Other   (15.2 )     18.5  
    Changes in operating assets and liabilities, net of impact of business combinations:      
    Accounts receivable—net   (45.4 )     (146.4 )
    Inventory   131.2       (253.5 )
    Prepaid expenses and other current assets   (13.7 )     (27.6 )
    Deferred contract costs   (311.1 )     (353.5 )
    Deferred tax assets   (223.2 )     (301.9 )
    Other assets   (11.0 )     17.7  
    Accounts payable   (10.2 )     (43.1 )
    Accrued liabilities   (106.7 )     137.4  
    Accrued payroll and compensation   —       23.4  
    Other liabilities   (8.3 )     (21.7 )
    Deferred revenue   577.8       1,095.3  
         Net cash provided by operating activities   2,258.1       1,935.5  
    CASH FLOWS FROM INVESTING ACTIVITIES:      
    Purchases of investments   (1,948.6 )     (1,855.8 )
    Sales of investments   0.5       4.0  
    Maturities of investments   1,891.7       1,414.8  
    Purchases of property and equipment   (378.9 )     (204.1 )
    Purchase of investment in privately held company   —       (8.5 )
    Payments made in connection with business combinations, net of cash acquired   (275.5 )     —  
    Purchases of marketable equity securities   (16.7 )     —  
    Other   0.1       0.3  
         Net cash used in investing activities   (727.4 )     (649.3 )
    CASH FLOWS FROM FINANCING ACTIVITIES:      
    Repurchase and retirement of common stock   (0.6 )     (1,500.5 )
    Proceeds from issuance of common stock   63.1       43.8  
    Taxes paid related to net share settlement of equity awards   (100.9 )     (112.5 )
    Other   (11.7 )     (1.2 )
         Net cash used in financing activities   (50.1 )     (1,570.4 )
    EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS   (2.6 )     (0.8 )
    NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   1,478.0       (285.0 )
    CASH AND CASH EQUIVALENTS—Beginning of year   1,397.9       1,682.9  
    CASH AND CASH EQUIVALENTS—End of year $ 2,875.9     $ 1,397.9  
    Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures
    (Unaudited, in millions, except per share amounts)

    Reconciliation of GAAP operating income to non-GAAP operating income, operating margin, net income and diluted net income per share

      Three Months Ended   Year Ended
      December 31,
    2024    		   December 31,
    2023    		   December 31,
    2024    		   December 31,
    2023
    Reconciliation of non-GAAP operating income:              
    GAAP operating income $ 574.1     $ 385.4     $ 1,803.4     $ 1,241.1  
    GAAP operating margin   34.6 %     27.2 %     30.3 %     23.4 %
    Add back:              
    Stock‐based compensation   66.5       64.0       260.2       251.6  
    Amortization of acquired intangible assets   11.5       5.3       23.1       18.9  
    Litigation-related matter (a)   —       —       3.2       —  
    Gain on intellectual property matter   (1.2 )     (1.2 )     (4.6 )     (4.6 )
    Non‐GAAP operating income $ 650.9     $ 453.5     $ 2,085.3     $ 1,507.0  
    Non‐GAAP operating margin   39.2 %     32.0 %     35.0 %     28.4 %
                   
    Reconciliation of non-GAAP net income:              
    GAAP net income $ 526.2     $ 310.9     $ 1,745.2     $ 1,147.8  
    Add back:              
    Stock‐based compensation   66.5       64.0       260.2       251.6  
    Amortization of acquired intangible assets   11.5       5.3       23.1       18.9  
    Litigation-related matter (a)   —       —       3.2       —  
    Gain on intellectual property matter   (1.2 )     (1.2 )     (4.6 )     (4.6 )
    Gain on bargain purchase (b)   —       —       (106.3 )     —  
    Tax adjustment (c)   (31.5 )     13.0       (95.9 )     (128.1 )
    Non-cash charge on equity method investment (d)   —       —       8.0       —  
    Non-GAAP net income $ 571.5     $ 392.0     $ 1,832.9     $ 1,285.6  
                   
    Non-GAAP net income per share, diluted              
    Non-GAAP net income $ 571.5     $ 392.0     $ 1,832.9     $ 1,285.6  
    Non-GAAP shares used in diluted net income per share calculations   775.2       772.3       771.9       788.2  
    Non-GAAP net income per share, diluted $ 0.74     $ 0.51     $ 2.37     $ 1.63  
                   
    Reconciliation of non-GAAP net income per share, diluted              
    GAAP net income per share, diluted $ 0.68     $ 0.40     $ 2.26     $ 1.46  
    Add back:              
    Non-GAAP adjustments to net income per share   0.06       0.11       0.11       0.17  
    Non-GAAP net income per share, diluted $ 0.74     $ 0.51     $ 2.37     $ 1.63  

    (a) To exclude a $3.2 million adjustment for a litigation settlement in the three months ended September 30, 2024.
    (b) To exclude a $106.3 million gain on bargain purchase related to our acquisition of Lacework Inc in the three months ended September 30, 2024.
    (c) Non-GAAP financial information is adjusted to an effective tax rate of 17% in the three months and year ended December 31, 2024 and 2023, respectively, on a non-GAAP basis, which differs from the GAAP effective tax rate.
    (d) To exclude an $8.0 million non-cash charge of impairment on our equity method investment in Linksys.

    Reconciliation of net cash provided by operating activities to free cash flow

      Three Months Ended   Year Ended
      December 31,
    2024    		   December 31,
    2023    		   December 31,
    2024    		   December 31,
    2023
    Net cash provided by operating activities $ 477.6     $ 191.7     $ 2,258.1     $ 1,935.5  
    Less: Purchases of property and equipment   (97.6 )     (26.9 )     (378.9 )     (204.1 )
    Free cash flow $ 380.0     $ 164.8     $ 1,879.2     $ 1,731.4  
    Net cash used in investing activities $ (79.9 )   $ (71.6 )   $ (727.4 )   $ (649.3 )
    Net cash used in financing activities $ (8.8 )   $ (910.1 )   $ (50.1 )   $ (1,570.4 )


    Reconciliation of total revenue to total billings

      Three Months Ended   Year Ended
      December 31,
    2024    		   December 31,
    2023    		   December 31,
    2024    		   December 31,
    2023
    Total revenue $ 1,660.1     $ 1,415.1     $ 5,955.8     $ 5,304.8  
    Add: Change in deferred revenue   349.2       449.7       625.9       1,094.7  
    Less: Deferred revenue balance acquired in business acquisitions   (6.8 )     —       (49.2 )     —  
    Total billings $ 2,002.5     $ 1,864.8     $ 6,532.5     $ 6,399.5  
    Investor Contact: Media Contact:
       
    Aaron Ovadia Michelle Zimmermann
    Fortinet, Inc. Fortinet, Inc.
    408-235-7700 408-235-7700
    investors@fortinet.com pr@fortinet.com

    The MIL Network –

  • MIL-OSI: Microchip Technology Announces Financial Results for Third Quarter of Fiscal Year 2025

    Source: GlobeNewswire (MIL-OSI)

    • Net sales of $1.026 billion, down 11.8% sequentially and down 41.9% from the year ago quarter. Our updated guidance provided on December 2, 2024 was net sales of $1.025 billion.
    • On a GAAP basis: gross profit of 54.7%; operating income of $30.9 million and 3.0% of net sales; net loss of $53.6 million; and loss of $0.10 per diluted share. Our guidance provided on November 5, 2024 was for GAAP earnings (loss) per share of $(0.04) to $0.03 per diluted share.
    • On a Non-GAAP basis: gross profit of 55.4%; operating income of $210.7 million and 20.5% of net sales; net income of $107.3 million; and EPS of $0.20 per diluted share. Our updated guidance provided on December 2, 2024 was for Non-GAAP EPS of $0.25 per diluted share.
    • Returned approximately $244.6 million to stockholders in the December quarter through dividends.
    • Quarterly dividend declared today for the March quarter of 45.5 cents per share, an increase of 1.1% from the year ago quarter.

    CHANDLER, Ariz., Feb. 06, 2025 (GLOBE NEWSWIRE) — (NASDAQ: MCHP) – Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today reported results for the three months ended December 31, 2024, as summarized in the table below.

      Three Months Ended December 31, 2024(1)
    Net sales $1,026.0      
      GAAP % Non-GAAP(2) %
    Gross profit $561.4 54.7% $568.8 55.4%
    Operating income $30.9 3.0% $210.7 20.5%
    Other expense $(77.0)   $(76.7)  
    Income tax provision $7.5   $26.7  
    Net (loss) income $(53.6) (5.2)% $107.3 10.5%
    Net (loss) income per diluted share $(0.10)   $0.20  

    (1) In millions, except per share amounts and percentages of net sales.
    (2) See the “Use of Non-GAAP Financial Measures” section of this release.

    Net sales for the third quarter of fiscal 2025 were $1.026 billion, down 41.9% from net sales of $1.766 billion in the prior year’s third fiscal quarter.

    GAAP net loss for the third quarter of fiscal 2025 was $53.6 million, or $0.10 per diluted share, down from GAAP net income of $419.2 million, or $0.77 per diluted share, in the prior year’s third fiscal quarter. For the third quarters of fiscal 2025 and fiscal 2024, GAAP results were adversely impacted by amortization of acquired intangible assets associated with our previous acquisitions.

    Non-GAAP net income for the third quarter of fiscal 2025 was $107.3 million, or $0.20 per diluted share, down from non-GAAP net income of $592.7 million, or $1.08 per diluted share, in the prior year’s third fiscal quarter. For the third quarters of fiscal 2025 and fiscal 2024, our non-GAAP results exclude the effect of share-based compensation, expenses related to our acquisition activities (including intangible asset amortization, severance, and other restructuring costs, and legal and other general and administrative expenses associated with acquisitions including legal fees and expenses for litigation and investigations related to our Microsemi acquisition), professional services associated with certain legal matters, and losses on the settlement of debt. For the third quarters of fiscal 2025 and fiscal 2024, our non-GAAP income tax expense is presented based on projected cash taxes for the applicable fiscal year, excluding transition tax payments under the Tax Cuts and Jobs Act. A reconciliation of our non-GAAP and GAAP results is included in this press release.

    Microchip announced today that its Board of Directors declared a quarterly cash dividend on its common stock of 45.5 cents per share, up 1.1% from the year ago quarter. The quarterly dividend is payable on March 7, 2025 to stockholders of record on February 24, 2025.

    “Our December quarter performance reflects the need for the decisive steps we are taking to realign our business, as revenue declined to $1.026 billion and inventory levels reached 266 days,” said Steve Sanghi, Microchip’s CEO and President. “Since returning as CEO in November, we have already initiated several key actions, including restructuring our manufacturing footprint, adjusting our channel strategy and intensifying our customer engagement. Our initial assessment indicates clear areas for operational enhancement, and we are taking a methodical yet urgent approach to evaluating all aspects of our business and implementing necessary changes to strengthen our competitive position.”

    Eric Bjornholt, Microchip’s Chief Financial Officer, said, “We are executing on multiple operational initiatives to enhance our financial performance. Our focus remains on returning to premium profitability levels that have historically differentiated Microchip, supported by our diversified business model. While navigating the current cycle, we continue to focus on inventory management while maintaining our commitment to shareholder returns.”

    Rich Simoncic, Microchip’s Chief Operating Officer, said, “Our comprehensive technology platform is driving innovation across critical markets, with our new RISC-V processors and expanded connectivity solutions demonstrating strong momentum in industrial, automotive, and aerospace applications. By delivering advanced AI capabilities, enhanced networking, and robust security technologies, we believe we are well-positioned to meet the evolving needs of our customers in increasingly complex technological environments.”

    Mr. Sanghi concluded, “While we have seen substantial inventory destocking at our customers and channel partners, we believe the correction cycle is still not completed. Our March quarter bookings are running at a higher rate than December, though overall levels remain low. With net sales guidance of $920.0 million to $1.000 billion for our March quarter, we maintain a cautious but focused approach and look forward to providing a comprehensive update during our business update call on March 3, 2025.”

    Fourth Quarter Fiscal Year 2025 Outlook:

    The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

      Microchip Consolidated Guidance
    Net Sales $920.0 million to $1.000 billion    
      GAAP(5) Non-GAAP Adjustments(1) Non-GAAP(1)
    Gross Profit 51.2% to 53.1% $7.8 to $8.8 million 52.0% to 54.0%
    Operating Expenses(2) 56.1% to 60.0% $179.7 to $183.7 million 37.7% to 40.5%
    Operating Income (loss) (8.9)% to (2.9)% $187.5 to $192.5 million 11.5% to 16.3%
    Other Expense, net $69.7 to $71.3 million $(0.2) to $0.2 million $69.5 to $71.5 million
    Income Tax (Benefit) Provision $(24.5) to $(19.8) million(3) $29.5 to $33.4 million $5.0 to $13.6 million(4)
    Net Income (loss) $(128.5) to $(79.4) million $157.8 to $159.3 million $29.3 to $79.9 million
    Diluted Common Shares Outstanding Approximately 538.4 million shares   Approximately 541.5 to 542.5 million shares
    Earnings (loss) per Diluted Share $(0.24) to $(0.14) $0.29 $0.05 to $0.15

    (1) See the “Use of Non-GAAP Financial Measures” section of this release for information regarding our non-GAAP guidance.
    (2) We are not able to estimate the amount of certain Special Charges and Other, net that may be incurred during the quarter ending March 31, 2025. Therefore, our estimate of GAAP operating expenses excludes certain amounts that may be recognized as Special Charges and Other, net in the quarter ending March 31, 2025.
    (3) The forecast for GAAP tax expense excludes any unexpected tax events that may occur during the quarter, as these amounts cannot be forecasted.
    (4) Represents the expected cash tax rate for fiscal 2025, excluding any transition tax payments associated with the Tax Cuts and Jobs Act.
    (5) Our GAAP guidance excludes the impact of any potential charges related to our ongoing evaluation of restructuring activities.

    Capital expenditures for the quarter ending March 31, 2025 are expected to be about $23 million. Capital expenditures for all of fiscal 2025 are expected to be about $135 million. Consistent with the slowing macroeconomic environment in fiscal 2025, we have paused most of our factory expansion actions and reduced our planned capital investments through fiscal 2026. However, we are adding capital equipment to selectively expand our production capacity and add research and development equipment.

    Under the GAAP revenue recognition standard, we are required to recognize revenue when control of the product changes from us to a customer or distributor. We focus our sales and marketing efforts on creating demand for our products in the end markets we serve and not on moving inventory into our distribution network. We also manage our manufacturing and supply chain operations, including our distributor relationships, towards the goal of having our products available at the time and location the end customer desires.

    Use of Non-GAAP Financial Measures: Our non-GAAP adjustments, where applicable, include the effect of share-based compensation, expenses related to our acquisition activities (including intangible asset amortization, severance, and other restructuring costs, and legal and other general and administrative expenses associated with acquisitions including legal fees and expenses for litigation and investigations related to our Microsemi acquisition), professional services associated with certain legal matters, and losses on the settlement of debt. For the third quarters of fiscal 2025 and fiscal 2024, our non-GAAP income tax expense is presented based on projected cash taxes for the fiscal year, excluding transition tax payments under the Tax Cuts and Jobs Act.

    We are required to estimate the cost of certain forms of share-based compensation, including employee stock options, restricted stock units, and our employee stock purchase plan, and to record a commensurate expense in our income statement. Share-based compensation expense is a non-cash expense that varies in amount from period to period and is affected by the price of our stock at the date of grant. The price of our stock is affected by market forces that are difficult to predict and are not within the control of management. Our other non-GAAP adjustments are either non-cash expenses, unusual or infrequent items, or other expenses related to transactions. Management excludes all of these items from its internal operating forecasts and models.

    We are using non-GAAP operating expenses in dollars, including non-GAAP research and development expenses and non-GAAP selling, general and administrative expenses, non-GAAP other expense, net, and non-GAAP income tax rate, which exclude the items noted above, as applicable, to permit additional analysis of our performance.

    Management believes these non-GAAP measures are useful to investors because they enhance the understanding of our historical financial performance and comparability between periods. Many of our investors have requested that we disclose this non-GAAP information because they believe it is useful in understanding our performance as it excludes non-cash and other charges that many investors feel may obscure our underlying operating results. Management uses non-GAAP measures to manage and assess the profitability of our business and for compensation purposes. We also use our non-GAAP results when developing and monitoring our budgets and spending. Our determination of these non-GAAP measures might not be the same as similarly titled measures used by other companies, and it should not be construed as a substitute for amounts determined in accordance with GAAP. There are limitations associated with using these non-GAAP measures, including that they exclude financial information that some may consider important in evaluating our performance. Management compensates for this by presenting information on both a GAAP and non-GAAP basis for investors and providing reconciliations of the GAAP and non-GAAP results.

    Generally, gross profit fluctuates over time, driven primarily by the mix of products sold and licensing revenue; variances in manufacturing yields; fixed cost absorption; wafer fab loading levels; costs of wafers from foundries; inventory reserves; pricing pressures in our non-proprietary product lines; and competitive and economic conditions. Operating expenses fluctuate over time, primarily due to net sales and profit levels.

    Diluted Common Shares Outstanding can vary for, among other things, the trading price of our common stock, the exercise of options or vesting of restricted stock units, the potential for incremental dilutive shares from our convertible debentures (additional information regarding our share count is available in the investor relations section of our website under the heading “Supplemental Information”), and repurchases or issuances of shares of our common stock. The diluted common shares outstanding presented in the guidance table above assumes an average Microchip stock price in the March 2025 quarter between $55 and $65 per share (however, we make no prediction as to what our actual share price will be for such period or any other period and we cannot estimate what our stock option exercise activity will be during the quarter).

     
    MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (in millions, except per share amounts; unaudited)
     
      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Net sales $ 1,026.0     $ 1,765.7     $ 3,431.1     $ 6,308.6  
    Cost of sales   464.6       645.7       1,464.3       2,102.8  
    Gross profit   561.4       1,120.0       1,966.8       4,205.8  
                   
    Research and development   246.2       266.0       728.6       857.1  
    Selling, general and administrative   158.2       172.2       465.7       572.4  
    Amortization of acquired intangible assets   122.6       151.3       368.3       454.2  
    Special charges and other, net   3.5       1.1       7.6       4.6  
    Operating expenses   530.5       590.6       1,570.2       1,888.3  
                   
    Operating income   30.9       529.4       396.6       2,317.5  
                   
    Other expense, net   (77.0 )     (45.1 )     (189.4 )     (151.3 )
    (Loss) income before income taxes   (46.1 )     484.3       207.2       2,166.2  
    Income tax provision   7.5       65.1       53.1       414.0  
    Net (loss) income $ (53.6 )   $ 419.2     $ 154.1     $ 1,752.2  
                   
    Basic net (loss) income per common share $ (0.10 )   $ 0.78     $ 0.29     $ 3.23  
    Diluted net (loss) income per common share $ (0.10 )   $ 0.77     $ 0.28     $ 3.19  
                   
    Basic common shares outstanding   537.4       540.8       536.9       543.0  
    Diluted common shares outstanding   537.4       546.5       542.1       549.0  
     
    MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in millions; unaudited)
     
    ASSETS
      December 31,   March 31,
        2024       2024  
    Cash and short-term investments $ 586.0     $ 319.7  
    Accounts receivable, net   857.2       1,143.7  
    Inventories   1,356.3       1,316.0  
    Other current assets   196.3       233.6  
    Total current assets   2,995.8       3,013.0  
           
    Property, plant and equipment, net   1,152.1       1,194.6  
    Other assets   11,484.3       11,665.6  
    Total assets $ 15,632.2     $ 15,873.2  
           
    LIABILITIES AND STOCKHOLDERS’ EQUITY
           
    Accounts payable and accrued liabilities $ 1,330.3     $ 1,520.0  
    Current portion of long-term debt   —       999.4  
    Total current liabilities   1,330.3       2,519.4  
           
    Long-term debt   6,749.5       5,000.4  
    Long-term income tax payable   598.7       649.2  
    Long-term deferred tax liability   22.9       28.8  
    Other long-term liabilities   899.3       1,017.6  
           
    Stockholders’ equity   6,031.5       6,657.8  
    Total liabilities and stockholders’ equity $ 15,632.2     $ 15,873.2  


    MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
    RECONCILIATION OF GAAP TO NON-GAAP MEASURES
    (in millions, except per share amounts and percentages; unaudited)

    RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Gross profit, as reported $ 561.4     $ 1,120.0     $ 1,966.8     $ 4,205.8  
    Share-based compensation expense   7.4       6.0       18.3       20.2  
    Cybersecurity incident expenses   —       —       20.1       —  
    Non-GAAP gross profit $ 568.8     $ 1,126.0     $ 2,005.2     $ 4,226.0  
    GAAP gross profit percentage   54.7 %     63.4 %     57.3 %     66.7 %
    Non-GAAP gross profit percentage   55.4 %     63.8 %     58.4 %     67.0 %

    RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Research and development expenses, as reported $ 246.2     $ 266.0     $ 728.6     $ 857.1  
    Share-based compensation expense   (28.8 )     (24.4 )     (79.0 )     (71.0 )
    Other adjustments   —       (0.1 )     —       (0.5 )
    Non-GAAP research and development expenses $ 217.4     $ 241.5     $ 649.6     $ 785.6  
    GAAP research and development expenses as a percentage of net sales   24.0 %     15.1 %     21.2 %     13.6 %
    Non-GAAP research and development expenses as a percentage of net sales   21.2 %     13.7 %     18.9 %     12.5 %

    RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Selling, general and administrative expenses, as reported $ 158.2     $ 172.2     $ 465.7     $ 572.4  
    Share-based compensation expense   (13.2 )     (14.4 )     (42.4 )     (43.5 )
    Cybersecurity incident expenses   —       —       (1.3 )     —  
    Other adjustments   (3.9 )     (1.0 )     (7.3 )     (0.5 )
    Professional services associated with certain legal matters   (0.4 )     (0.4 )     (1.1 )     (1.2 )
    Non-GAAP selling, general and administrative expenses $ 140.7     $ 156.4     $ 413.6     $ 527.2  
    GAAP selling, general and administrative expenses as a percentage of net sales   15.4 %     9.8 %     13.6 %     9.1 %
    Non-GAAP selling, general and administrative expenses as a percentage of net sales   13.7 %     8.9 %     12.1 %     8.4 %

    RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Operating expenses, as reported $ 530.5     $ 590.6     $ 1,570.2     $ 1,888.3  
    Share-based compensation expense   (42.0 )     (38.8 )     (121.4 )     (114.5 )
    Cybersecurity incident expenses   —       —       (1.3 )     —  
    Other adjustments   (3.9 )     (1.1 )     (7.3 )     (1.0 )
    Professional services associated with certain legal matters   (0.4 )     (0.4 )     (1.1 )     (1.2 )
    Amortization of acquired intangible assets (1)   (122.6 )     (151.3 )     (368.3 )     (454.2 )
    Special charges and other, net   (3.5 )     (1.1 )     (7.6 )     (4.6 )
    Non-GAAP operating expenses $ 358.1     $ 397.9     $ 1,063.2     $ 1,312.8  
    GAAP operating expenses as a percentage of net sales   51.7 %     33.4 %     45.8 %     29.9 %
    Non-GAAP operating expenses as a percentage of net sales   34.9 %     22.5 %     31.0 %     20.8 %

    (1) Amortization of acquired intangible assets consists of core and developed technology and customer-related acquired intangible assets in connection with business combinations. Such charges are excluded for purposes of calculating certain non-GAAP measures.

    RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Operating income, as reported $ 30.9     $ 529.4     $ 396.6     $ 2,317.5  
    Share-based compensation expense   49.4       44.8       139.7       134.7  
    Cybersecurity incident expenses   —       —       21.4       —  
    Other adjustments   3.9       1.1       7.3       1.0  
    Professional services associated with certain legal matters   0.4       0.4       1.1       1.2  
    Amortization of acquired intangible assets (1)   122.6       151.3       368.3       454.2  
    Special charges and other, net   3.5       1.1       7.6       4.6  
    Non-GAAP operating income $ 210.7     $ 728.1     $ 942.0     $ 2,913.2  
    GAAP operating income as a percentage of net sales   3.0 %     30.0 %     11.6 %     36.7 %
    Non-GAAP operating income as a percentage of net sales   20.5 %     41.2 %     27.5 %     46.2 %

    (1) Amortization of acquired intangible assets consists of core and developed technology and customer-related acquired intangible assets in connection with business combinations. Such charges are excluded for purposes of calculating certain non-GAAP measures. The use of acquired intangible assets contributed to our revenues earned during the periods presented.

    RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP OTHER EXPENSE, NET

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Other expense, net, as reported $ (77.0 )   $ (45.1 )   $ (189.4 )   $ (151.3 )
    Loss on settlement of debt   0.3       —       0.3       12.2  
    Loss on available-for-sale investments   —       —       1.8       —  
    Non-GAAP other expense, net $ (76.7 )   $ (45.1 )   $ (187.3 )   $ (139.1 )
    GAAP other expense, net, as a percentage of net sales (7.5 )%   (2.6 )%   (5.5 )%   (2.4 )%
    Non-GAAP other expense, net, as a percentage of net sales (7.5 )%   (2.6 )%   (5.5 )%   (2.2 )%

    RECONCILIATION OF GAAP INCOME TAX PROVISION TO NON-GAAP INCOME TAX PROVISION

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Income tax provision as reported $ 7.5     $ 65.1     $ 53.1     $ 414.0  
    Income tax rate, as reported (16.3 )%     13.4 %     25.6 %     19.1 %
    Other non-GAAP tax adjustment   19.2       25.2       54.2       (27.2 )
    Non-GAAP income tax provision $ 26.7     $ 90.3     $ 107.3     $ 386.8  
    Non-GAAP income tax rate   19.9 %     13.2 %     14.2 %     13.9 %

    RECONCILIATION OF GAAP NET (LOSS) INCOME AND GAAP DILUTED NET (LOSS) INCOME PER COMMON SHARE TO NON-GAAP NET INCOME AND NON-GAAP DILUTED NET INCOME PER COMMON SHARE

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    Net (loss) income, as reported $ (53.6 )   $ 419.2     $ 154.1     $ 1,752.2  
    Share-based compensation expense   49.4       44.8       139.7       134.7  
    Cybersecurity incident expenses   —       —       21.4       —  
    Other adjustments   3.9       1.1       7.3       1.0  
    Professional services associated with certain legal matters   0.4       0.4       1.1       1.2  
    Amortization of acquired intangible assets   122.6       151.3       368.3       454.2  
    Special charges and other, net   3.5       1.1       7.6       4.6  
    Loss on settlement of debt   0.3       —       0.3       12.2  
    Loss on available-for-sale investments   —       —       1.8       —  
    Other non-GAAP tax adjustment   (19.2 )     (25.2 )     (54.2 )     27.2  
    Non-GAAP net income $ 107.3     $ 592.7     $ 647.4     $ 2,387.3  
    GAAP net (loss) income as a percentage of net sales (5.2 )%     23.7 %     4.5 %     27.8 %
    Non-GAAP net income as a percentage of net sales   10.5 %     33.6 %     18.9 %     37.8 %
    Diluted net (loss) income per common share, as reported $ (0.10 )   $ 0.77     $ 0.28     $ 3.19  
    Non-GAAP diluted net income per common share $ 0.20     $ 1.08     $ 1.19     $ 4.35  
    Diluted common shares outstanding, as reported   537.4       546.5       542.1       549.0  
    Diluted common shares outstanding non-GAAP   541.6       546.5       542.1       549.0  

    RECONCILIATION OF GAAP CASH FLOW FROM OPERATIONS TO FREE CASH FLOW

      Three Months Ended December 31,   Nine Months Ended December 31,
        2024       2023       2024       2023  
    GAAP cash flow from operations, as reported $ 271.5     $ 853.3     $ 692.2     $ 2,462.7  
    Capital expenditures   (18.1 )     (59.5 )     (111.8 )     (245.0 )
    Free cash flow $ 253.4     $ 793.8     $ 580.4     $ 2,217.7  
    GAAP cash flow from operations as a percentage of net sales   26.5 %     48.3 %     20.2 %     39.0 %
    Free cash flow as a percentage of net sales   24.7 %     45.0 %     16.9 %     35.2 %

    Microchip will host a conference call today, February 6, 2025 at 5:00 p.m. (Eastern Time) to discuss this release. This call will be simulcast over the Internet at www.microchip.com. The webcast will be available for replay until February 27, 2025.

    A telephonic replay of the conference call will be available at approximately 8:00 p.m. (Eastern Time) on February 6, 2025 and will remain available until 5:00 p.m. (Eastern Time) on February 27, 2025. Interested parties may listen to the replay by dialing 201-612-7415/877-660-6853 and entering access code 13750989.

    Cautionary Statement:
    The statements in this release relating to the decisive steps we are taking to realign our business, restructuring our manufacturing footprint, adjusting our channel strategy and intensifying our customer engagement, clear areas for operational enhancements, taking a methodical yet urgent approach to evaluating all aspects of our business and implementing necessary changes to strengthen our competitive position, executing on multiple operational initiatives to enhance our financial performance, that our focus remains on returning to premium profitability levels that have historically differentiated Microchip, supported by our diversified business model, that we continue to focus on inventory management while maintaining our commitment to shareholder returns, that our comprehensive technology platform is driving innovation across critical markets, with our new RISC-V processors and expanded connectivity solutions demonstrating strong momentum in industrial, automotive, and aerospace applications, that we believe we are well-positioned to meet the evolving needs of our customers in increasingly complex technological environments, that we believe the correction cycle is still not completed, our net sales guidance of $920.0 million to $1.000 billion for our March 2025 quarter, that we maintain a cautious but focused approach, our fourth quarter fiscal 2025 guidance for net sales and GAAP and non-GAAP gross profit, operating expenses, operating income (loss), other expense, net, income tax (benefit) provision, net income (loss), diluted common shares outstanding, earnings (loss) per diluted share, capital expenditures for the March 2025 quarter and for all of fiscal 2025, adding capital equipment to selectively expand our production capacity and add research and development equipment, our belief that non-GAAP measures are useful to investors and our assumed average stock price in the March 2025 quarter are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: any continued uncertainty, fluctuations or weakness in the U.S. and world economies (including China and Europe) due to changes in interest rates or high inflation, actions taken or which may be taken by the Trump administration or the new U.S. Congress, monetary policy, political, geopolitical, trade or other issues in the U.S. or internationally (including the military conflicts in Ukraine-Russia and the Middle East), further changes in demand or market acceptance of our products and the products of our customers and our ability to respond to any increases or decreases in market demand or customer

    requests to reschedule or cancel orders; the mix of inventory we hold, our ability to satisfy any short-term orders from our inventory and our ability to effectively manage our inventory levels; foreign currency effects on our business; changes in utilization of our manufacturing capacity and our ability to effectively manage our production levels to meet any increases or decreases in market demand or any customer requests to reschedule or cancel orders; the impact of inflation on our business; competitive developments including pricing pressures; the level of orders that are received and can be shipped in a quarter; our ability to realize the expected benefits of our long-term supply assurance program; changes or fluctuations in customer order patterns and seasonality; our ability to effectively manage our supply of wafers from third party wafer foundries to meet any decreases or increases in our needs and the cost of such wafers, our ability to obtain additional capacity from our suppliers to increase production to meet any future increases in market demand; our ability to successfully integrate the operations and employees, retain key employees and customers and otherwise realize the expected synergies and benefits of our acquisitions; the impact of any future significant acquisitions or strategic transactions we may make; the costs and outcome of any current or future litigation or other matters involving our acquisitions (including the acquired business, intellectual property, customers, or other issues); the costs and outcome of any current or future tax audit or investigation regarding our business or our acquired businesses; the impact that the CHIPS Act will have on increasing manufacturing capacity in our industry by providing incentives for us, our competitors and foundries to build new wafer manufacturing facilities or expand existing facilities; the amount and timing of any incentives we may receive under the CHIPS Act, the impact of current and future changes in U.S. corporate tax laws (including the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017); fluctuations in our stock price and trading volume which could impact the number of shares we acquire under our share repurchase program and the timing of such repurchases; disruptions in our business or the businesses of our customers or suppliers due to natural disasters (including any floods in Thailand), terrorist activity, armed conflict, war, worldwide oil prices and supply, public health concerns or disruptions in the transportation system; and general economic, industry or political conditions in the United States or internationally.

    For a detailed discussion of these and other risk factors, please refer to Microchip’s filings on Forms 10-K and 10-Q. You can obtain copies of Forms 10-K and 10-Q and other relevant documents for free at Microchip’s website (www.microchip.com) or the SEC’s website (www.sec.gov) or from commercial document retrieval services.

    Stockholders of Microchip are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Microchip does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after this February 6, 2025 press release, or to reflect the occurrence of unanticipated events.

    About Microchip:

    Microchip Technology Incorporated is a leading provider of smart, connected and secure embedded control solutions. Its easy-to-use development tools and comprehensive product portfolio enable customers to create optimal designs, which reduce risk while lowering total system cost and time to market. Our solutions serve approximately 112,000 customers across the industrial, automotive, consumer, aerospace and defense, communications and computing markets. Headquartered in Chandler, Arizona, Microchip offers outstanding technical support along with dependable delivery and quality. For more information, visit the Microchip website at www.microchip.com.

    Note: The Microchip name and logo are registered trademarks of Microchip Technology Incorporated in the U.S.A. and other countries. All other trademarks mentioned herein are the property of their respective companies.

    INVESTOR RELATIONS CONTACT:

    Sajid Daudi — Head of investor Relations….. (480) 792-7385

    The MIL Network –

  • MIL-OSI: Northeast Bank Reports Second Quarter Results and Declares Dividend

    Source: GlobeNewswire (MIL-OSI)

    PORTLAND, Maine, Feb. 06, 2025 (GLOBE NEWSWIRE) — Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $22.4 million, or $2.74 per diluted common share, for the quarter ended December 31, 2024, compared to net income of $14.1 million, or $1.85 per diluted common share, for the quarter ended December 31, 2023. Net income for the six months ended December 31, 2024 was $39.5 million, or $4.85 per diluted common share, compared to $29.2 million, or $3.86 per diluted common share, for the six months ended December 31, 2023.

    The Board of Directors declared a cash dividend of $0.01 per share, payable on March 4, 2025, to shareholders of record as of February 18, 2025.

    Discussing these results, Rick Wayne, Chief Executive Officer, said, “Our National Lending Division generated $260.4 million in originated and purchased volume for the quarter, including record originations of $246.4 million. Our small balance SBA 7(a) program with Newity LLC as our loan service provider has continued to grow. For the quarter, we originated $100.3 million, compared to $82.4 million for the quarter ended September 30, 2024 and $13.6 million for the quarter ended December 31, 2023. During the current quarter we sold $64.5 million of the guaranteed portion of our SBA loans, generating a gain on sale of $5.6 million. Additionally, we approved and initiated an additional at-the-market (“ATM”) offering of up to $75.0 million of our voting common stock, which provides the Bank with the ability to raise capital if and as needed. We are reporting earnings of $2.74 per diluted common share, a return on average equity of 21.1%, and a return on average assets of 2.2%.”

    As of December 31, 2024, total assets were $4.08 billion, an increase of $950.9 million, or 30.4%, from total assets of $3.13 billion as of June 30, 2024.

    1.  The following table highlights the changes in the loan portfolio, including loans held for sale, for the six months ended December 31, 2024:

      Loan Portfolio Changes  
      December 31, 2024
    Balance    		   June 30, 2024
    Balance    		       Change ($)     Change (%)
      (Dollars in thousands)
    National Lending Purchased $ 2,392,417   $ 1,708,551     $ 683,866     40.03 %
    National Lending Originated   1,109,192     981,497       127,695     13.01 %
    SBA National   103,554     48,405       55,149     113.92 %
    Community Banking   20,857     22,704       (1,847 )   (8.14 %)
    Total $ 3,626,020   $ 2,761,157     $ 864,863     31.32 %
                               

    Loans generated by the Bank’s National Lending Division for the quarter ended December 31, 2024 totaled $260.5 million, which consisted of $14.0 million of purchased loans at an average price of 94.8% of unpaid principal balance, and $246.4 million of originated loans.

    An overview of the Bank’s National Lending Division portfolio follows:

      National Lending Portfolio
      Three Months Ended December 31,
      2024     2023  
      Purchased   Originated   Total   Purchased   Originated   Total
      (Dollars in thousands)
    Loans purchased or originated during the period:                                  
    Unpaid principal balance $ 14,815     $ 246,417     $ 261,232     $ 208,045     $ 63,485     $ 271,530  
    Initial net investment basis (1)   14,039       246,417       260,456       186,131       63,485       249,616  
                                       
    Loan returns during the period:                                  
    Yield   8.84%       9.06%       8.91%       9.19%       9.81%       9.43%  
    Total Return on Purchased Loans (2)   8.86%       N/A       8.86%       9.21%       N/A       9.21%  
                                       
      Six Months Ended December 31,
      2024     2023  
      Purchased   Originated   Total   Purchased   Originated   Total
      (Dollars in thousands)
    Loans purchased or originated during the period:                                  
    Unpaid principal balance $ 822,549     $ 373,309     $ 1,195,858     $ 271,741     $ 131,528     $ 403,269  
    Initial net investment basis (1)   746,932       373,309       1,120,241       238,477       131,528       370,005  
                                       
    Loan returns during the period:                                  
    Yield   8.84 %     9.18%       8.95%       9.10%       9.92%       9.41%  
    Total Return on Purchased Loans (2)   8.85%       N/A       8.85%       9.13%       N/A       9.13%  
                                       
    Total loans as of period end:                                  
    Unpaid principal balance $ 2,598,354     $ 1,109,192     $ 3,707,546     $ 1,831,183     $ 910,213     $ 2,741,396  
    Net investment basis   2,392,417       1,109,192       3,501,609       1,646,756       910,213       2,556,969  
                                       

    (1) Initial net investment basis on purchased loans is the initial amortized cost basis net of initial allowance for credit losses (credit mark).
    (2) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains (losses) on real estate owned, release of allowance for credit losses on purchased loans, and other noninterest income recorded during the period divided by the average invested balance on an annualized basis. The total return on purchased loans does not include the effect of purchased loan charge-offs or recoveries during the period. Total return on purchased loans is considered a non-GAAP financial measure. See reconciliation in below table entitled “Total Return on Purchased Loans.”

    2. Deposits increased by $811.9 million, or 34.7%, from June 30, 2024. The increase was primarily attributable to increases in time deposits of $773.5 million, or 59.2%. The significant drivers in the change in time deposits were the increase in brokered time deposits, which increased by $660.5 million, and Community Banking Division time deposits, which increased by $90.5 million compared to June 30, 2024.

    3. Federal Home Loan Bank (“FHLB”) advances increased by $62.6 million, or 18.1%, from June 30, 2024. The increase was attributable to one new short-term borrowing, partially offset by net paydowns on amortizing advances.

    4. Shareholders’ equity increased by $67.5 million, or 17.9%, from June 30, 2024, primarily due to net income of $39.5 million and $28.1 million of net proceeds on shares issued in connection with the Bank’s ATM program.

    Net income increased by $8.4 million to $22.4 million for the quarter ended December 31, 2024, compared to net income of $14.1 million for the quarter ended December 31, 2023.

    1.  Net interest and dividend income before provision for credit losses increased by $11.5 million to $48.5 million for the quarter ended December 31, 2024, compared to $37.0 million for the quarter ended December 31, 2023. The increase was primarily due to the following:

    • An increase in interest income earned on loans of $20.2 million, primarily due to higher average balances in the National Lending Division purchased and originated and Small Business Administration (“SBA”) portfolios, partially offset by lower rates earned across the portfolio;
    • An increase in interest income earned on short-term investments of $925 thousand, due to higher average balances, partially offset by lower rates earned; and
    • A decrease in FHLB borrowings interest expense of $2.0 million, primarily due to lower average balances; partially offset by,
    • An increase in deposit interest expense of $11.6 million, primarily due to higher average balances, partially offset by lower rates on interest-bearing deposits.

    The following table summarizes interest income and related yields recognized on the loan portfolios:

      Interest Income and Yield on Loans
      Three Months Ended December 31,
      2024     2023  
      Average   Interest       Average   Interest    
      Balance (1)   Income   Yield   Balance (1)   Income   Yield
      (Dollars in thousands)
    Community Banking $ 21,481   $ 369   6.82 %   $ 25,559   $ 419   6.51 %
    SBA National   93,831     2,751   11.63 %     28,331     888   12.47 %
    National Lending:                              
    Originated   1,041,301     23,769   9.06 %     939,383     23,155   9.81 %
    Purchased   2,407,132     53,655   8.84 %     1,551,038     35,849   9.19 %
    Total National Lending   3,448,433     77,424   8.91 %     2,490,421     59,004   9.43 %
    Total $ 3,563,745   $ 80,544   8.97 %   $ 2,544,311   $ 60,311   9.43 %
     

    Six Months Ended December 31,
      2024     2023  
      Average   Interest       Average   Interest    
      Balance (1)   Income   Yield   Balance (1)   Income   Yield
      (Dollars in thousands)
    Community Banking $ 21,945   $ 738   6.67 %   $ 26,355   $ 857   6.47 %
    SBA National   76,788     5,170   13.36 %     27,294     1,674   12.20 %
    National Lending:                              
    Originated   1,019,347     47,176   9.18 %     950,006     47,375   9.92 %
    Purchased   2,082,969     92,797   8.84 %     1,520,215     69,519   9.10 %
    Total National Lending   3,102,316     139,973   8.95 %     2,470,221     116,894   9.41 %
    Total $ 3,201,049   $ 145,881   9.04 %   $ 2,523,870   $ 119,425   9.41 %

    (1) Includes loans held for sale.

    The components of total income on purchased loans are set forth in the table below entitled “Total Return on Purchased Loans.” When compared to the quarter ended December 31, 2023, transactional income increased by $541 thousand for the quarter ended December 31, 2024, and regularly scheduled interest and accretion increased by $17.3 million primarily due to the increase in average balances. The total return on purchased loans for the quarter ended December 31, 2024 was 8.9%, a decrease from 9.2% for the quarter ended December 31, 2023. The following table details the total return on purchased loans:

      Total Return on Purchased Loans
      Three Months Ended December 31,
      2024     2023  
      Income   Return (1)   Income   Return (1)
      (Dollars in thousands)
    Regularly scheduled interest and accretion $ 50,747   8.36 %   $ 33,430   8.57 %
    Transactional income:                  
    Release of allowance for credit losses on purchased loans   97   0.02 %     46   0.02 %
    Accelerated accretion and loan fees   2,908   0.48 %     2,419   0.62 %
    Total transactional income   3,005   0.50 %     2,465   0.64 %
    Total $ 53,752   8.86 %   $ 35,895   9.21 %
       
      Six Months Ended December 31,
      2024     2023  
      Income   Return (1)   Income   Return (1)
      (Dollars in thousands)
    Regularly scheduled interest and accretion $ 87,906   8.37 %   $ 64,460   8.44 %
    Transactional income:                  
    Release of allowance for credit losses on purchased loans   161   0.01 %     226   0.03 %
    Accelerated accretion and loan fees   4,891   0.47 %     5,059   0.66 %
    Total transactional income   5,052   0.48 %     5,285   0.69 %
    Total $ 92,958   8.85 %   $ 69,745   9.13 %
                           

    (1) The total return on purchased loans represents scheduled accretion, accelerated accretion, and gains (losses) on real estate owned, and release of allowance for credit losses on purchased loans recorded during the period divided by the average invested balance on an annualized basis. The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter. Total return is considered a non-GAAP financial measure.

    2. Provision for credit losses increased by $1.5 million to $1.9 million for the quarter ended December 31, 2024, compared to $436 thousand in the quarter ended December 31, 2023. The increase was primarily related to loan growth and increases in specific reserves on certain loans.

    3. Noninterest income increased by $4.5 million for the quarter ended December 31, 2024, compared to the quarter ended December 31, 2023, primarily due to an increase in gain on sale of SBA loans of $5.0 million, due to the sale of $64.5 million in SBA loans during the quarter ended December 31, 2024 as compared to the sale of $11.5 million during the quarter ended December 31, 2023.

    4. Noninterest expense increased by $3.4 million for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023, primarily due to the following:

    • An increase in salaries and employee benefits expense of $1.4 million, primarily due to increases in regular and stock compensation expense;
    • An increase in loan expense of $1.1 million primarily related to increased expenses in connection with the origination of SBA 7(a) loans; and
    • An increase in FDIC insurance expense of $669 thousand, due to the growth of the Bank’s asset size and an increased assessment rate.

    5. Income tax expense increased by $2.7 million to $11.0 million, or an effective tax rate of 32.9%, for the quarter ended December 31, 2024, compared to $8.3 million, or an effective tax rate of 37.1%, for the quarter ended December 31, 2023. The decrease in effective tax rate is primarily due to a write-down of the Bank’s deferred tax asset of $957 thousand in the quarter ended December 31, 2023 as a result of a change in Massachusetts income tax law.

    As of December 31, 2024, nonperforming assets totaled $31.3 million, or 0.77% of total assets, compared to $28.3 million, or 0.90% of total assets, as of June 30, 2024.

    As of December 31, 2024, past due loans totaled $30.5 million, or 0.85% of total loans, compared to past due loans totaling $26.3 million, or 0.95% of total loans, as of June 30, 2024.

    As of December 31, 2024, the Bank’s Tier 1 leverage capital ratio was 11.2%, compared to 12.3% at June 30, 2024, and the Total risk-based capital ratio was 13.9% at December 31, 2024, compared to 14.8% at June 30, 2024. Capital ratios decreased primarily due to the increase in risk-weighted assets and average assets from significant loan growth during the six months ended December 31, 2024, partially offset by increased retained earnings and additional capital raised under the Bank’s ATM program.

    Investor Call Information
    Rick Wayne, Chief Executive Officer, Richard Cohen, Chief Financial Officer, and Pat Dignan, Chief Operating Officer and Chief Credit Officer of Northeast Bank, will host a conference call to discuss second quarter earnings and business outlook at 10:00 a.m. Eastern Time on Friday, February 7th. To access the conference call by phone, please go to this link (Phone Registration), and you will be provided with dial in details. The call will be available via live webcast, which can be viewed by accessing the Bank’s website at www.northeastbank.com and clicking on the About Us – Investor Relations section. To listen to the webcast, attendees are encouraged to visit the website at least fifteen minutes early to register, download and install any necessary audio software. Please note there will also be a slide presentation that will accompany the webcast. For those who cannot listen to the live broadcast, a replay will be available online for one year at www.northeastbank.com.

    About Northeast Bank
    Northeast Bank (NASDAQ: NBN) is a full-service bank headquartered in Portland, Maine. We offer personal and business banking services to the Maine market via seven branches. Our National Lending Division purchases and originates commercial loans on a nationwide basis. ableBanking, a division of Northeast Bank, offers online savings products to consumers nationwide. Information regarding Northeast Bank can be found at www.northeastbank.com.

    Non-GAAP Financial Measures
    In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures, including tangible common shareholders’ equity, tangible book value per share, total return on purchased loans, and efficiency ratio. The Bank’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

    Forward-Looking Statements
    Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in other documents we file with the Federal Deposit Insurance Corporation (the “FDIC”), in our annual reports to our shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters. Although the Bank believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, contingencies, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Bank’s control. The Bank’s actual results could differ materially from those expressed or implied by such the forward-looking statements as a result of, among other factors, changes in interest rates and real estate values; changes in employment levels, general business and economic conditions on a national basis and in the local markets in which the Bank operates; changes in customer behavior due to changing business and economic conditions (including inflation and concerns about liquidity) or legislative or regulatory initiatives; the possibility that future credits losses are higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; turbulence in the capital and debt markets; competitive pressures from other financial institutions; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of credit loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changes in legislation and regulation under the new U.S. presidential administration; operational risks including, but not limited to, cybersecurity, fraud, natural disasters, climate change and future pandemics; the risk that the Bank may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Bank’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Bank’s Annual Report on Form 10-K, as amended by Amendment No. 1 to the Annual Report on Form 10-K/A as updated in the Bank’s Quarterly Reports on Form 10-Q and other filings submitted to the FDIC. These statements speak only as of the date of this release and the Bank does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.

    NBN-F

     
    NORTHEAST BANK
    BALANCE SHEETS
    (Unaudited)
    (Dollars in thousands, except share and per share data)
      December 31, 2024   June 30, 2024  
    Assets            
    Cash and due from banks $ 2,538   $ 2,711    
    Short-term investments   362,332     239,447    
    Total cash and cash equivalents   364,870     242,158    
                 
                 
    Available-for-sale debt securities, at fair value   27,616     48,978    
    Equity securities, at fair value   7,171     7,013    
    Total investment securities   34,787     55,991    
                 
    SBA loans held for sale   35,234     14,506    
                 
    Loans:            
    Commercial real estate   2,703,938     2,028,280    
    Commercial and industrial   778,189     618,846    
    Residential real estate   108,427     99,234    
    Consumer   232     291    
    Total loans   3,590,786     2,746,651    
    Less: Allowance for credit losses   44,773     26,709    
    Loans, net   3,546,013     2,719,942    
                 
                 
    Premises and equipment, net   25,739     27,144    
    Real estate owned and other possessed collateral, net   1,200     –    
    Federal Home Loan Bank stock, at cost   17,798     15,751    
    Loan servicing rights, net   841     984    
    Bank-owned life insurance   19,078     18,830    
    Accrued interest receivable   16,939     15,163    
    Other assets   20,555     21,734    
    Total assets $ 4,083,054   $ 3,132,203    
                 
    Liabilities and Shareholders’ Equity            
    Deposits:            
    Demand $ 159,002   $ 146,727    
    Savings and interest checking   782,570     732,029    
    Money market   130,063     154,504    
    Time   2,079,703     1,306,203    
    Total deposits   3,151,338     2,339,463    
                 
    Federal Home Loan Bank and other advances   407,824     345,190    
    Lease liability   19,461     20,252    
    Other liabilities   60,330     50,664    
    Total liabilities   3,638,953     2,755,569    
                 
    Commitments and contingencies   –     –    
                 
    Shareholders’ equity            
    Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares          
    issued and outstanding at December 31 and June 30, 2024   –     –    
    Voting common stock, $1.00 par value, 25,000,000 shares authorized;            
    8,492,856 and 8,127,690 shares issued and outstanding at          
    December 31 and June 30, 2024, respectively   8,493     8,128    
    Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;            
    No shares issued and outstanding at December 31 and June 30, 2024 –   –    
    Additional paid-in capital   92,292     64,762    
    Retained earnings   343,302     303,927    
    Accumulated other comprehensive income (loss)   14     (183 )  
    Total shareholders’ equity   444,101     376,634    
    Total liabilities and shareholders’ equity $ 4,083,054   $ 3,132,203    
     
    NORTHEAST BANK
    STATEMENTS OF INCOME
    (Unaudited)
    (Dollars in thousands, except share and per share data)
        Three Months Ended December 31,   Six Months Ended December 31,
        2024     2023     2024   2023  
      Interest and dividend income:                      
      Interest and fees on loans $ 80,544     $ 60,311     $ 145,881   $ 119,425  
      Interest on available-for-sale securities   436       560       1,031     1,043  
      Other interest and dividend income   4,186       3,261       8,108     6,361  
      Total interest and dividend income   85,166       64,132       155,020     126,829  
                             
      Interest expense:                      
      Deposits   32,777       21,175       59,367     40,433  
      Federal Home Loan Bank advances   3,666       5,701       7,696     11,847  
      Obligation under capital lease agreements   233       256       467     425  
      Total interest expense   36,676       27,132       67,530     52,705  
                             
      Net interest and dividend income before provision for credit losses   48,490       37,000       87,490     74,124  
      Provision for credit losses   1,944       436       2,366     625  
      Net interest and dividend income after provision for credit losses   46,546       36,564       85,124     73,499  
                             
      Noninterest income:                      
      Fees for other services to customers   391       492       834     899  
      Gain on sales of SBA loans   5,570       570       8,901     822  
      Net unrealized gain (loss) on equity securities   (163 )     230       27     72  
      Loss on real estate owned, other repossessed collateral and premises and equipment, net   –       (9 )     –     (9 )
      Bank-owned life insurance income   125       116       248     231  
      Correspondent fee income   23       52       54     143  
      Other noninterest income   3       15       5     87  
      Total noninterest income   5,949       1,466       10,069     2,245  
                             
      Noninterest expense:                      
      Salaries and employee benefits   11,287       9,905       22,470     19,625  
      Occupancy and equipment expense   1,103       1,101       2,182     2,206  
      Professional fees   562       499       1,315     1,281  
      Data processing fees   1,622       1,347       3,109     2,447  
      Marketing expense   94       221       230     482  
      Loan acquisition and collection expense   2,063       939       3,355     1,589  
      FDIC insurance expense   956       287       1,288     644  
      Other noninterest expense   1,379       1,370       2,802     2,784  
      Total noninterest expense   19,066       15,669       36,751     31,058  
                             
      Income before income tax expense   33,429       22,361       58,442     44,686  
      Income tax expense   10,989       8,307       18,896     15,460  
      Net income $ 22,440     $ 14,054     $ 39,546   $ 29,226  
                             
      Weighted-average shares outstanding:                      
      Basic   8,044,345       7,505,109       7,965,486     7,492,310  
      Diluted   8,197,568       7,590,913       8,153,368     7,572,450  
      Earnings per common share:                      
      Basic $ 2.79     $ 1.87     $ 4.96   $ 3.90  
      Diluted   2.74       1.85       4.85     3.86  
      Cash dividends declared per common share $ 0.01     $ 0.01     $ 0.02   $ 0.02  
     
    NORTHEAST BANK
    AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
    (Unaudited)
    (Dollars in thousands)
      Three Months Ended December 31,
      2024     2023  
          Interest   Average       Interest   Average
      Average   Income/   Yield/   Average   Income/   Yield/
      Balance   Expense   Rate   Balance   Expense   Rate
    Assets:                              
    Interest-earning assets:                              
    Investment securities $ 40,004   $ 436   4.32 %   $ 59,797   $ 560   3.73 %
    Loans (1) (2) (3)   3,563,745     80,544   8.97 %     2,544,311     60,311   9.43 %
    Federal Home Loan Bank stock   15,458     346   8.88 %     21,222     468   8.77 %
    Short-term investments (4)   325,118     3,840   4.69 %     206,090     2,793   5.39 %
    Total interest-earning assets   3,944,325     85,166   8.57 %     2,831,420     64,132   9.01 %
    Cash and due from banks   2,216               2,508          
    Other non-interest earning assets   30,982               69,245          
    Total assets $ 3,977,523             $ 2,903,173          
                                   
    Liabilities & Shareholders’ Equity:                              
    Interest-bearing liabilities:                              
    NOW accounts $ 581,969   $ 5,932   4.04 %   $ 511,217   $ 5,636   4.39 %
    Money market accounts   128,787     953   2.94 %     229,154     2,009   3.49 %
    Savings accounts   187,701     1,653   3.49 %     122,643     917   2.97 %
    Time deposits   2,080,911     24,239   4.62 %     1,022,767     12,613   4.91 %
    Total interest-bearing deposits   2,979,368     32,777   4.36 %     1,885,781     21,175   4.47 %
    Federal Home Loan Bank advances   336,762     3,666   4.32 %     481,824     5,701   4.71 %
    Lease liability   19,599     233   4.72 %     21,361     256   4.77 %
    Total interest-bearing liabilities   3,335,729     36,676   4.36 %     2,388,966     27,132   4.52 %
                                   
    Non-interest bearing liabilities:                              
    Demand deposits and escrow accounts   190,135               167,358          
    Other liabilities   30,501               24,616          
    Total liabilities   3,556,365               2,580,940          
    Shareholders’ equity   421,158               322,233          
    Total liabilities and shareholders’ equity $ 3,977,523             $ 2,903,173          
                                   
    Net interest income       $ 48,490             $ 37,000    
                                   
    Interest rate spread             4.21 %               4.49 %
    Net interest margin (5)             4.88 %               5.20 %
                                   
    Cost of funds (6)             4.13 %               4.22 %
                                   
    (1)  Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
    (2)  Includes loans held for sale.
    (3)  Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
    (4)  Short-term investments include FHLB overnight deposits and other interest-bearing deposits.
    (5)  Net interest margin is calculated as net interest income divided by total interest-earning assets.
    (6)  Cost of funds is calculated as total interest expense divided by total interest-bearing liabilities plus demand deposits and escrow accounts.
     
    NORTHEAST BANK
    AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
    (Unaudited)
    (Dollars in thousands)
      Six Months Ended December 31,
      2024     2023  
          Interest   Average       Interest   Average
      Average   Income/   Yield/   Average   Income/   Yield/
      Balance   Expense   Rate   Balance   Expense   Rate
    Assets:                              
    Interest-earning assets:                              
    Investment securities $ 47,708   $ 1,031   4.29 %   $ 59,986   $ 1,043   3.46 %
    Loans (1) (2) (3)   3,201,049     145,881   9.04 %     2,523,870     119,425   9.41 %
    Federal Home Loan Bank stock   15,961     676   8.40 %     21,790     881   8.04 %
    Short-term investments (4)   285,330     7,432   5.17 %     203,946     5,480   5.34 %
    Total interest-earning assets   3,550,048     155,020   8.66 %     2,809,592     126,829   8.98 %
    Cash and due from banks   2,164               2,500          
    Other non-interest earning assets   62,527               62,753          
    Total assets $ 3,614,739             $ 2,874,845          
                                   
    Liabilities & Shareholders’ Equity:                              
    Interest-bearing liabilities:                              
    NOW accounts $ 572,849   $ 12,312   4.26 %   $ 499,331   $ 10,781   4.29 %
    Money market accounts   138,738     2,219   3.17 %     243,725     4,142   3.38 %
    Savings accounts   183,141     3,210   3.48 %     106,820     1,477   2.75 %
    Time deposits   1,735,372     41,626   4.76 %     999,993     24,033   4.78 %
    Total interest-bearing deposits   2,630,100     59,367   4.48 %     1,849,869     40,433   4.35 %
    Federal Home Loan Bank advances   349,678     7,696   4.37 %     496,169     11,847   4.75 %
    Lease liability   19,808     467   4.68 %     21,568     425   3.92 %
    Total interest-bearing liabilities   2,999,586     67,530   4.47 %     2,367,606     52,705   4.43 %
                                   
    Non-interest bearing liabilities:                              
    Demand deposits and escrow accounts   182,648               168,348          
    Other liabilities   28,337               24,842          
    Total liabilities   3,210,571               2,560,796          
    Shareholders’ equity   404,168               314,049          
    Total liabilities and shareholders’ equity $ 3,614,739             $ 2,874,845          
                                   
    Net interest income       $ 87,490             $ 74,124    
                                   
    Interest rate spread             4.19 %               4.55 %
    Net interest margin (5)             4.89 %               5.25 %
                                   
    Cost of funds (6)             4.21 %               4.04 %
                                   
    (1)  Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
    (2)  Includes loans held for sale.
    (3)  Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
    (4)  Short-term investments include FHLB overnight deposits and other interest-bearing deposits.
    (5)  Net interest margin is calculated as net interest income divided by total interest-earning assets.
    (6)  Cost of funds is calculated as total interest expense divided by total interest-bearing liabilities plus demand deposits and escrow accounts.
     
    NORTHEAST BANK
    SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
    (Unaudited)
    (Dollars in thousands, except share and per share data)
      Three Months Ended
      December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023
    Net interest income $ 48,490     $ 39,000     $ 37,935     $ 36,512     $ 37,000  
    Provision for credit losses   1,944       422       547       596       436  
    Noninterest income   5,949       4,119       2,092       1,542       1,466  
    Noninterest expense   19,066       17,685       17,079       16,429       15,669  
    Net income   22,440       17,106       15,140       13,865       14,054  
                       
    Weighted-average common shares outstanding:                  
    Basic   8,044,345       7,886,148       7,765,868       7,509,320       7,505,109  
    Diluted   8,197,568       8,108,688       7,910,692       7,595,124       7,590,913  
    Earnings per common share:                  
    Basic $ 2.79     $ 2.17     $ 1.95     $ 1.85     $ 1.87  
    Diluted   2.74       2.11       1.91       1.83       1.85  
                       
    Dividends declared per common share $ 0.01     $ 0.01     $ 0.01     $ 0.01     $ 0.01  
                       
    Return on average assets   2.24%       2.09%       1.99%       1.87%       1.93%  
    Return on average equity   21.14%       17.53%       16.56%       16.45%       17.35%  
    Net interest rate spread (1)   4.21%       4.18%       4.41%       4.27%       4.49%  
    Net interest margin (2)   4.88%       4.90%       5.13%       5.01%       5.20%  
    Efficiency ratio (non-GAAP) (3)   35.02%       41.01%       42.67%       43.17%       40.73%  
    Noninterest expense to average total assets   1.90%       2.16%       2.24%       2.21%       2.15%  
    Average interest-earning assets to average interest-bearing liabilities   118.24%       118.48%       118.78%       119.28%       118.52%  
                       
      As of:
      December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024   December 31, 2023
    Nonperforming loans:                  
    Originated portfolio:                  
    Residential real estate $ 2,446     $ 3,976     $ 2,502     $ 2,573     $ 2,582  
    Commercial real estate   3,662       4,682       1,407       2,075       2,075  
    Commercial and industrial   6,696       6,684       6,520       6,928       6,950  
    Consumer   5       –       –       –       –  
    Total originated portfolio   12,809       15,342       10,429       11,576       11,607  
    Total purchased portfolio   17,257       21,830       17,832       16,370       19,165  
    Total nonperforming loans   30,066       37,172       28,261       27,946       30,772  
    Real estate owned and other repossessed collateral, net   1,200       –       –       –       –  
    Total nonperforming assets $ 31,266     $ 37,172     $ 28,261     $ 27,946     $ 30,772  
                       
    Past due loans to total loans   0.85%       0.89%       0.95%       1.13%       1.22%  
    Nonperforming loans to total loans   0.84%       1.06%       1.02%       1.05%       1.18%  
    Nonperforming assets to total assets   0.77%       0.94%       0.90%       0.93%       1.04%  
    Allowance for credit losses to total loans   1.25%       1.25%       0.97%       0.98%       1.06%  
    Allowance for credit losses to nonperforming loans   148.92%       117.40%       94.51%       92.83%       89.67%  
    Net charge-offs (recoveries) $ 869     $ 1,604     $ 1,347     $ 2,225     $ 995  
    Commercial real estate loans to total capital (4)   542.12%       604.38%       482.13%       509.08%       544.34%  
    Net loans to deposits   112.52%       110.70%       116.88%       118.15%       121.31%  
    Purchased loans to total loans   66.63%       69.11%       61.88%       60.99%       63.07%  
    Equity to total assets   10.88%       9.96%       12.02%       11.73%       11.03%  
    Common equity tier 1 capital ratio   12.66%       11.45%       13.84%       13.24%       12.63%  
    Total risk-based capital ratio   13.91%       12.70%       14.82%       14.22%       13.71%  
    Tier 1 leverage capital ratio   11.16%       12.06%       12.30%       11.79%       11.28%  
                       
    Total shareholders’ equity $ 444,101     $ 392,557     $ 376,634     $ 351,913     $ 327,540  
    Less: Preferred stock   –       –       –       –       –  
    Common shareholders’ equity   444,101       392,557       376,634       351,913       327,540  
    Less: Intangible assets (5)   –       –       –       –       –  
    Tangible common shareholders’ equity (non-GAAP) $ 444,101     $ 392,557     $ 376,634     $ 351,913     $ 327,540  
                       
    Common shares outstanding   8,492,856       8,212,026       8,127,690       7,977,690       7,804,052  
    Book value per common share $ 52.29     $ 47.80     $ 46.34     $ 44.11     $ 41.97  
    Tangible book value per share (non-GAAP) (6)   52.29       47.80       46.34       44.11       41.97  
                       
    (1) The net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.
    (2) The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
    (3) The efficiency ratio represents noninterest expense divided by the sum of net interest income (before the credit loss provision) plus noninterest income.
    (4) For purposes of calculating this ratio, commercial real estate includes all non-owner occupied commercial real estate loans defined as such by regulatory guidance, including all land development and construction loans.
    (5) Includes the loan servicing rights asset.
    (6) Tangible book value per share represents total shareholders’ equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
     

    For More Information:
    Richard Cohen, Chief Financial Officer
    Northeast Bank, 27 Pearl Street, Portland, Maine 04101
    207.786.3245 ext. 3249
    www.northeastbank.com

    The MIL Network –

  • MIL-OSI: First Pacific Bancorp Reports Fourth Quarter and Full Year 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    WHITTIER, Calif., Feb. 06, 2025 (GLOBE NEWSWIRE) — First Pacific Bancorp (the “Company”) (OTC Pink: FPBC), the holding company for First Pacific Bank (the “Bank”), today reported consolidated results for the fourth quarter and year ending December 31, 2024, marking its seventh consecutive quarter of profitability. The Company remains well-capitalized, with a robust liquidity position supported by a stable core deposit base and access to substantial sources of liquidity.

    Highlights for the fourth quarter and full year 2024 include:

    • Total assets ended 2024 at $433 million, up $13 million from $420 million at year end 2023.
    • Total deposits ended 2024 at $351 million, up $18 million since year end 2023.
    • Total loans ended 2024 at $277 million, up $2 million from year end 2023.
    • Asset quality remains excellent with minimal levels of classified or non-performing assets.
    • The Bank ended the fourth quarter with a strong capital position, with a leverage capital ratio of 9.0% and a total risk-based capital ratio of 13.4%.
    • As of December 31, 2024, cash and cash equivalents totaled $41 million, including funds invested overnight, up $19 million since year end 2023.
    • Unused borrowing capacity from credit facilities in place on December 31, 2024, totaled $167 million.

    For the fourth quarter ending December 31, 2024, the Company realized a pre-tax, pre-provision profit of $702 thousand, compared to a pre-tax, pre-provision profit of $345 thousand in Q3 2024. Net income for the fourth quarter of 2024 was $500 thousand, up from $249 thousand in Q3 2024. For the twelve months ending December 31, 2024, the Company reported $1.1 million in net income, up from a net loss of $164 thousand reported for the twelve months ending December 31, 2023.     

    Asset quality remains excellent with minimal non-performing assets and the allowance for credit losses is 1.15% of total loans. There was no provision for credit losses recognized for the year ending 2024, compared to $906 thousand for the year ending December 31, 2023.

    “We are pleased to close out 2024 on a strong note, achieving seven consecutive quarters of profitability and demonstrating the success of our strategic approach,” said Joe Matranga, Chairman of the Board of Directors. “With a solid capital position, strong liquidity, and sound financial standing, we are well-positioned to continue to execute our strategy and drive sustainable, long-term value for our stakeholders.”

    “We delivered another strong quarter of financial results highlighted by loan and deposit growth, excellent asset quality, and a solid capital and liquidity position,” said Nathan Rogge, President and Chief Executive Officer. “We enter 2025 with strong momentum and a clear growth strategy, driven by strategic investments in technology and innovation designed to enhance the banking experience and reinforce our competitive advantage.”

    “As a Southern California-based company, we are deeply saddened by the devastation caused by the recent wildfires. Our thoughts and prayers are with everyone impacted by this disaster and we are committed to helping Los Angeles move forward.”

    ABOUT FIRST PACIFIC BANK

    First Pacific Bank is a wholly owned subsidiary of First Pacific Bancorp (OTC Pink: FPBC) and is a growing community bank catering to individuals, professionals, and small-to-medium sized businesses throughout Southern California. Since opening in 2006, the Bank has offered a personalized approach, access to decision makers, a broad range of solutions, and a commitment to delivering an exceptional customer experience. First Pacific Bank operates locations in Los Angeles County, Orange County, San Diego County, and the Inland Empire. For more information, visit firstpacbank.com or call 888.BNK.AT.FPB.

    FORWARD-LOOKING STATEMENTS

    This news release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, and First Pacific Bancorp intends for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. Forward-looking statements relate to, among other things, our business plan, and strategies, and can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” and similar expressions. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Factors that might cause such differences include, but are not limited to: successfully realizing the benefits of our business strategy and plans,; changes in general economic and financial market conditions, either nationally or locally, in areas in which First Pacific Bank conducts its operations; effects of inflation and changes in interest rates; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; increased competitive challenges and expanding product and pricing pressures among financial institutions; impact of any natural disasters, including earthquakes; effect of governmental supervision and regulation, including any regulatory or other enforcement actions; legislation or regulatory changes which adversely affect First Pacific Bank’s operations or business; loss of key personnel; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company does not undertake, and specifically disclaims any obligation to update any forward-looking statements to reflect occurrences or unanticipated events, or circumstances after the date of such statements except as required by law.  

    — Summary Financial Tables Follow —

    First PacificBancorp          
    Consolidated Balance Sheets          
    (Unaudited)          
      Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023
    ASSETS          
    Cash and due from banks $ 4,708,926   $ 23,584,084   $ 4,671,483   $ 7,317,500   $ 4,308,149  
    Fed funds sold & int-bearing balances   36,290,000     25,520,000     37,860,000     37,575,000     18,060,000  
    Total cash and cash equivalents   40,998,926     49,104,084     42,531,483     44,892,500     22,368,149  
               
    Debt securities (AFS)   1,866,022     3,041,852     3,077,666     5,138,340     5,257,049  
    Debt securities (HTM)   100,257,560     101,260,391     102,202,926     103,474,749     104,343,133  
    Total debt securities   102,123,582     104,302,243     105,280,592     108,613,089     109,600,182  
               
    Construction & land development   23,320,351     23,067,204     24,651,513     25,480,398     27,070,749  
    1-4 Family residential   58,588,090     58,082,570     68,588,393     68,521,663     66,567,165  
    Multifamily residential   28,561,276     28,966,811     26,800,829     26,947,419     27,128,177  
    Nonfarm, nonresidential real estate   100,066,570     99,715,860     94,643,169     97,893,840     99,627,812  
    Commercial & industrial   62,322,690     57,342,017     53,504,969     54,785,564     53,938,659  
    Consumer & Other   4,525,108     780,639     1,831,036     1,123,918     865,849  
    Total loans   277,384,085     267,955,101     270,019,909     274,752,802     275,198,411  
    Allowance for credit losses (loans)   (3,179,637 )   (3,109,975 )   (3,109,975 )   (3,109,975 )   (3,109,975 )
    Total loans, net   274,204,448     264,845,126     266,909,934     271,642,827     272,088,436  
               
    Premises, equipment, and ROU net   1,328,964     1,452,886     1,714,833     1,992,588     2,268,671  
    Goodwill, core deposit & other intangibles   1,273,134     1,287,129     1,298,084     1,313,367     1,328,651  
    Bank owned life insurance   5,287,738     5,257,550     5,227,763     5,198,654     5,170,521  
    Accrued interest and other assets   7,755,355     7,505,380     7,476,554     7,415,609     7,392,301  
               
    Total Assets $ 432,972,147   $ 433,754,398   $ 430,439,243   $ 441,068,634   $ 420,216,911  
               
    LIABILITIES AND SHAREHOLDERS’ EQUITY          
    Deposits:          
    Noninterest-bearing demand $ 131,515,568   $ 129,473,091   $ 144,240,187   $ 133,945,262   $ 121,348,095  
    Interest-bearing transaction accounts   28,454,639     24,660,000     24,797,108     28,166,207     34,716,150  
    Money market and savings   146,423,126     143,270,628     143,497,864     148,732,230     139,011,862  
    Time deposits   44,302,867     44,388,137     41,060,590     38,662,227     38,235,413  
    Total deposits   350,696,200     341,791,856     353,595,749     349,505,926     333,311,520  
               
    Borrowings   40,000,000     50,000,000     35,000,000     50,000,000     45,000,000  
    Accrued interest and other liabilities   3,122,902     3,430,132     3,781,444     3,936,909     4,530,208  
    Total liabilities   393,819,102     395,221,988     392,377,193     403,442,835     382,841,728  
               
    Shareholders’ Equity:          
    Capital stock and APIC   37,272,567     37,117,627     36,970,386     36,788,606     36,699,786  
    Retained earnings   2,650,877     2,151,305     1,902,788     1,705,174     1,543,264  
    Accum other comprehensive income   (770,399 )   (736,522 )   (811,124 )   (867,981 )   (867,867 )
    Total shareholders’ equity   39,153,045     38,532,410     38,062,050     37,625,799     37,375,183  
               
    Total Liabilities and Shareholders’ Equity $ 432,972,147   $ 433,754,398   $ 430,439,243   $ 441,068,634   $ 420,216,911  
               
    First PacificBancorp          
    Consolidated Income Statements – Quarterly          
    (Unaudited)          
               
      Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023
    INTEREST INCOME          
    Loans, including fees $ 4,814,128 $ 4,817,174 $ 4,655,844 $ 4,700,535 $ 4,653,303  
    Debt securities   484,508   499,268   514,613   543,857   544,330  
    Fed funds & int-bearing balances   419,597   450,166   573,022   410,685   258,178  
    Total interest income   5,718,233   5,766,608   5,743,479   5,655,077   5,455,811  
               
    INTEREST EXPENSE          
    Deposits   1,777,351   1,790,578   1,687,121   1,746,032   1,542,541  
    Borrowings   332,375   444,250   524,599   507,390   705,324  
    Total interest expense   2,109,726   2,234,828   2,211,720   2,253,422   2,247,865  
               
    Net interest income   3,608,507   3,531,780   3,531,759   3,401,655   3,207,946  
               
    Provision for credit losses   –   –   –   –   101,538  
               
    Net interest income after provision   3,608,507   3,531,780   3,531,759   3,401,655   3,106,408  
               
    NONINTEREST INCOME          
    Service charges, fees and other income   119,173   106,628   96,460   108,365   108,769  
    Sublease income   –   53,975   52,970   53,872   53,872  
    Gains (losses) on sale of assets   –   15,335   –   –   (12,982 )
    Gains on early payoff of debt   54,125   –   144,325   –   –  
    Total noninterest income   173,298   175,938   293,755   162,237   149,659  
               
    NONINTEREST EXPENSE          
    Salaries and benefits   1,984,774   2,154,290   2,182,674   2,178,486   1,954,029  
    Occupancy and equipment   258,180   374,069   363,695   368,816   384,088  
    Other expense   836,692   834,281   1,007,247   794,158   894,440  
    Total noninterest expense   3,079,646   3,362,640   3,553,616   3,341,460   3,232,557  
               
    Income before income tax expense   702,159   345,078   271,898   222,432   23,510  
               
    Income tax expense (benefit)   202,586   96,563   74,281   60,524   (31,955 )
               
    Net Income $ 499,573 $ 248,515 $ 197,617 $ 161,908 $ 55,465  
               
    Earnings per share basic (QTR) $ 0.12 $ 0.06 $ 0.05 $ 0.04 $ 0.01  
    Weighted average shares outstanding (QTR)   4,293,829   4,288,851   4,283,351   4,281,653   4,231,841  
               
    First PacificBancorp    
    Consolidated Income Statements – Year-to-Date    
    (Unaudited)    
         
      Dec 31, 2024 Dec 31, 2023
    INTEREST INCOME    
    Loans, including fees $ 18,987,681 $ 16,705,212  
    Investment securities   2,042,246   2,279,349  
    Fed funds & int-bearing balances   1,853,470   1,000,827  
    Total interest income   22,883,397   19,985,388  
         
    INTEREST EXPENSE    
    Deposits   7,001,082   4,744,486  
    Borrowings   1,808,614   2,440,727  
    Total interest expense   8,809,696   7,185,213  
         
    Net interest income   14,073,701   12,800,175  
         
    Provision for credit losses   –   905,966  
         
    Net interest income after provision   14,073,701   11,894,209  
         
    NONINTEREST INCOME    
    Service charges, fees and other income   430,626   455,823  
    Sublease income   160,817   212,074  
    Gains (losses) on sale of assets   15,335   129,093  
    Gains on early payoff of debt   198,450   123,077  
    Total noninterest income   805,228   920,067  
         
    NON INTEREST EXPENSE    
    Salaries and benefits   8,500,224   8,558,603  
    Occupancy and equipment   1,364,760   1,470,277  
    Other expense   3,472,378   3,124,577  
    Total noninterest expense   13,337,362   13,153,457  
         
    Income before income tax expense   1,541,567   (339,181 )
         
    Income tax expense (benefit)   433,954   (175,262 )
         
    Net Income (loss) $ 1,107,613 $ (163,919 )
         
    Earnings (loss) per share basic (YTD) $ 0.26 $ (0.04 )
    Weighted average shares outstanding (YTD)   4,286,945   3,992,738  
               
    First PacificBancorp            
    Quarterly Financial Highlights            
    (Unaudited)            
        Quarterly
        2024 2024 2024 2024 2023
    ($ in thousands except per share data)   4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
    EARNINGS            
    Net interest income $ 3,609   3,532   3,532   3,402   3,208  
    Provision for loan losses $ 0   0   0   0   102  
    Noninterest income $ 173   176   294   162   150  
    Noninterest expense $ 3,080   3,363   3,554   3,341   3,233  
    Income tax expense $ 203   97   74   61   (32 )
    Net income $ 500   249   198   162   55  
                 
    Earnings per share basic $ 0.12   0.06   0.05   0.04   0.01  
    Weighted average shares outstanding   4,293,829   4,288,851   4,283,351   4,281,653   4,231,841  
    Ending shares outstanding   4,294,500   4,291,927   4,283,351   4,283,351   4,231,841  
                 
    PERFORMANCE RATIOS            
    Return on average assets   0.47 % 0.23 % 0.18 % 0.15 % 0.05 %
    Return on average common equity   5.12 % 2.58 % 2.10 % 1.73 % 0.59 %
    Yield on loans   6.91 % 6.98 % 6.97 % 6.84 % 6.69 %
    Yield on earning assets   5.50 % 5.58 % 5.52 % 5.49 % 5.35 %
    Cost of deposits   1.98 % 2.05 % 1.96 % 2.05 % 1.89 %
    Cost of funding   2.18 % 2.32 % 2.28 % 2.35 % 2.37 %
    Net interest margin   3.47 % 3.42 % 3.40 % 3.31 % 3.15 %
    Efficiency ratio   81.4 % 90.7 % 92.9 % 93.8 % 96.3 %
                 
    CAPITAL            
    Tangible equity to tangible assets   8.77 % 8.61 % 8.57 % 8.26 % 8.61 %
    Book value (BV) per common share $ 9.12   8.98   8.89   8.78   8.83  
    Tangible BV per common share $ 8.82   8.68   8.58   8.48   8.52  
                 
    ASSET QUALITY            
    Net loan charge-offs (recoveries) $ 0   0   0   0   0  
    Allowance for credit losses (loans) $ 3,180   3,110   3,110   3,110   3,110  
    Allowance to total loans   1.15 % 1.16 % 1.15 % 1.13 % 1.13 %
    Nonperforming loans $ 672   991   77   160   61  
                 
    END OF PERIOD BALANCES            
    Total loans $ 277,384   267,955   270,020   274,753   275,198  
    Total assets $ 432,972   433,754   430,439   441,069   420,217  
    Deposits $ 350,696   341,792   353,596   349,506   333,312  
    Loans to deposits   79.1 % 78.4 % 76.4 % 78.6 % 82.6 %
    Shareholders’ equity $ 39,153   38,532   38,062   37,626   37,375  
    Full-time equivalent employees   49   44   44   46   45  
                 
    AVERAGE BALANCES (QTRLY)            
    Total loans $ 276,294   273,960   267,766   275,578   276,016  
    Earning assets $ 412,417   410,298   416,965   412,791   404,210  
    Total assets $ 425,750   424,199   430,830   426,592   417,595  
    Deposits $ 355,369   346,142   346,032   341,226   323,300  
    Shareholders’ equity $ 38,746   38,267   37,788   37,443   37,179  

    The MIL Network –

  • MIL-OSI: Monolithic Power Systems Announces Results for the Fourth Quarter and Year Ended December 31, 2024 and an Increase in Quarterly Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    KIRKLAND, Wash., Feb. 06, 2025 (GLOBE NEWSWIRE) — Monolithic Power Systems, Inc. (“MPS”) (Nasdaq: MPWR), a fabless global company that provides high-performance, semiconductor-based power electronics solutions, today announced financial results for the quarter and year ended December 31, 2024. MPS also announced that its Board of Directors has approved an increase in the quarterly cash dividend from $1.25 per share to $1.56 per share. The first quarter dividend of $1.56 per share will be paid on April 15, 2025 to all stockholders of record as of the close of business on March 31, 2025.

    The financial results for the quarter ended December 31, 2024 were as follows:

    • Revenue was $621.7 million for the quarter ended December 31, 2024, a 0.2% increase from $620.1 million for the quarter ended September 30, 2024 and a 36.9% increase from $454.0 million for the quarter ended December 31, 2023.
    • GAAP gross margin was 55.4% for the quarter ended December 31, 2024, compared with 55.3% for the quarter ended December 31, 2023.
    • Non-GAAP gross margin (1) was 55.8% for the quarter ended December 31, 2024, excluding the impact of $1.7 million for stock-based compensation and related expenses, $0.4 million for deferred compensation plan expense and $0.3 million for amortization of acquisition-related intangible assets, compared with 55.7% for the quarter ended December 31, 2023, excluding the impact of $1.2 million for stock-based compensation expense and $0.5 million for deferred compensation plan expense.
    • GAAP operating expenses were $181.1 million for the quarter ended December 31, 2024, compared with $141.6 million for the quarter ended December 31, 2023.
    • Non-GAAP operating expenses (1) were $126.1 million for the quarter ended December 31, 2024, excluding $54.6 million for stock-based compensation and related expenses, and $0.4 million for deferred compensation plan expense, compared with $96.7 million for the quarter ended December 31, 2023, excluding $39.9 million for stock-based compensation expense and $4.9 million for deferred compensation plan expense.
    • GAAP operating income was $163.3 million for the quarter ended December 31, 2024, compared with $109.6 million for the quarter ended December 31, 2023.
    • Non-GAAP operating income (1) was $220.7 million for the quarter ended December 31, 2024, excluding $56.3 million for stock-based compensation and related expenses, $0.8 million for deferred compensation plan expense and $0.3 million for amortization of acquisition-related intangible assets, compared with $156.1 million for the quarter ended December 31, 2023, excluding $41.1 million for stock-based compensation expense and $5.4 million for deferred compensation plan expense.
    • GAAP other income, net was $6.2 million for the quarter ended December 31, 2024, compared with $10.0 million for the quarter ended December 31, 2023.
    • Non-GAAP other income, net (1) was $6.0 million for the quarter ended December 31, 2024, excluding $0.2 million for deferred compensation plan income, compared with $4.9 million for the quarter ended December 31, 2023, excluding $5.1 million for deferred compensation plan income.
    • GAAP income before income taxes was $169.5 million for the quarter ended December 31, 2024, compared with $119.5 million for the quarter ended December 31, 2023.
    • Non-GAAP income before income taxes (1) was $226.7 million for the quarter ended December 31, 2024, excluding $56.3 million for stock-based compensation and related expenses, $0.6 million for net deferred compensation plan expense and $0.3 million for amortization of acquisition-related intangible assets, compared with $161.0 million for the quarter ended December 31, 2023, excluding $41.1 million for stock-based compensation expense and $0.3 million for net deferred compensation plan expense.
    • GAAP net income was $1.4 billion and $29.88 per diluted share for the quarter ended December 31, 2024. Comparatively, GAAP net income was $96.9 million and $1.98 per diluted share for the quarter ended December 31, 2023. GAAP net income and income per diluted share for the quarter ended December 31, 2024 included $1.3 billion for the recognition of a tax benefit granted to a foreign subsidiary.
    • Non-GAAP net income (1) was $198.4 million and $4.09 per diluted share for the quarter ended December 31, 2024 excluding $1.3 billion for the recognition of a tax benefit granted to a foreign subsidiary. Non-GAAP net income (1) for the quarter ended December 31, 2024 also excluded $56.3 million for stock-based compensation and related expenses, $0.6 million for net deferred compensation plan expense, $0.3 million for amortization of acquisition-related intangible assets and $22.8 million for the related tax effects, compared with $140.9 million and $2.88 per diluted share for the quarter ended December 31, 2023, excluding $41.1 million for stock-based compensation expense, $0.3 million for net deferred compensation plan expense and $2.5 million for the related tax effects.

     

    The financial results for the year ended December 31, 2024 were as follows:

    • Revenue was $2.2 billion for the year ended December 31, 2024, a 21.2% increase from $1.8 billion for the year ended December 31, 2023.
    • GAAP gross margin was 55.3% for the year ended December 31, 2024, compared with 56.1% for the year ended December 31, 2023.
    • Non-GAAP gross margin (1) was 55.8% for the year ended December 31, 2024, excluding the impact of $7.0 million for stock-based compensation and related expenses, $1.5 million for deferred compensation plan expense and $1.2 million for amortization of acquisition-related intangible assets, compared with 56.4% for the year ended December 31, 2023, excluding the impact of $4.5 million for stock-based compensation expense and $0.9 million for deferred compensation plan expense.
    • GAAP operating expenses were $681.5 million for the year ended December 31, 2024, compared with $539.4 million for the year ended December 31, 2023.
    • Non-GAAP operating expenses (1) were $466.4 million for the year ended December 31, 2024, excluding $206.2 million for stock-based compensation and related expenses, $8.8 million for deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets, compared with $385.4 million for the year ended December 31, 2023, excluding $145.2 million for stock-based compensation expense, $8.7 million for deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets.
    • GAAP operating income was $539.4 million for the year ended December 31, 2024, compared with $481.7 million for the year ended December 31, 2023.
    • Non-GAAP operating income (1) was $764.1 million for the year ended December 31, 2024, excluding $213.2 million for stock-based compensation and related expenses, $10.3 million for deferred compensation plan expense and $1.3 million for amortization of acquisition-related intangible assets, compared with $641.1 million for the year ended December 31, 2023, excluding $149.7 million for stock-based compensation expense, $9.6 million for deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets.
    • GAAP other income, net was $33.6 million for the year ended December 31, 2024, compared with $24.1 million for the year ended December 31, 2023.
    • Non-GAAP other income, net (1) was $24.2 million for the year ended December 31, 2024, excluding $9.4 million for deferred compensation plan income, compared with $15.6 million for the year ended December 31, 2023, excluding $8.5 million for deferred compensation plan income.
    • GAAP income before income taxes was $572.9 million for the year ended December 31, 2024, compared with $505.8 million for the year ended December 31, 2023.
    • Non-GAAP income before income taxes (1) was $788.3 million for the year ended December 31, 2024, excluding $213.2 million for stock-based compensation and related expenses, $1.3 million for amortization of acquisition-related intangible assets and $0.9 million for net deferred compensation plan expense, compared with $656.7 million for the year ended December 31, 2023, excluding $149.7 million for stock-based compensation expense, $1.1 million for net deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets.
    • GAAP net income was $1.8 billion and $36.59 per diluted share for the year ended December 31, 2024. Comparatively, GAAP net income was $427.4 million and $8.76 per diluted share for the year ended December 31, 2023. GAAP net income and income per diluted share for the year ended December 31, 2024 included $1.3 billion for the recognition of a tax benefit granted to a foreign subsidiary.
    • Non-GAAP net income (1) was $689.8 million and $14.12 per diluted share for the year ended December 31, 2024 excluding $1.3 billion for the recognition of a tax benefit granted to a foreign subsidiary. Non-GAAP net income (1) for the year ended December 31, 2024 also excluded $213.2 million for stock-based compensation and related expenses, $1.3 million for amortization of acquisition-related intangible assets, $0.9 million for net deferred compensation plan expense and $26.9 million for the related tax effects, compared with $574.6 million and $11.78 per diluted share for the year ended December 31, 2023, excluding $149.7 million for stock-based compensation expense, $1.1 million for net deferred compensation plan expense, $0.1 million for amortization of acquisition-related intangible assets and $3.6 million for the related tax effects.

    The following is a summary of revenue by end market (in thousands):

        Three Months Ended December 31,   Year Ended December 31,
    End Market   2024   2023   2024   2023
    Enterprise Data   $ 194,867     $ 128,897     $ 716,264     $ 322,980  
    Storage and Computing     136,507       117,312       501,576       491,139  
    Automotive     128,344       89,758       413,973       394,665  
    Communications     63,810       40,926       225,905       204,911  
    Consumer     57,311       43,741       202,015       234,660  
    Industrial     40,826       33,378       147,367       172,717  
    Total   $ 621,665     $ 454,012     $ 2,207,100     $ 1,821,072  
                                     

    “Our proven, long-term growth strategy remains intact as we continue our transformation from being a chip-only, semiconductor supplier to a full service, silicon-based solutions provider,” said Michael Hsing, CEO and founder of MPS. 

    Business Outlook

    The following are MPS’s financial targets for the first quarter ending March 31, 2025:

    • Revenue in the range of $610.0 million to $630.0 million.
    • GAAP gross margin between 55.1% and 55.7%. Non-GAAP gross margin (1) between 55.4% and 56.0%, which excludes estimated stock-based compensation and related expenses of $1.7 million as well as the impact from amortization of acquisition-related intangible assets.
    • GAAP operating expenses between $180.2 million and $186.2 million. Non-GAAP operating expenses (1) between $126.9 million and $130.9 million, which excludes estimated stock-based compensation and related expenses in the range of $53.3 million to $55.3 million.
    • Total stock-based compensation and related expenses of $55.0 million to $57.0 million including approximately $1.7 million that would be charged to cost of goods sold.
    • Interest and other income in the range of $5.8 million to $6.2 million before foreign exchange gains or losses.
    • Non-GAAP tax rate of 15.0% for 2025.
    • Fully diluted shares outstanding between 47.8 million and 48.2 million. 

    (1) Non-GAAP net income, non-GAAP net income per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other income, net, non-GAAP operating income and non-GAAP income before income taxes differ from net income, net income per share, gross margin, operating expenses, other income, net, operating income and income before income taxes determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Non-GAAP net income and non-GAAP net income per share exclude the effect of stock-based compensation and related expenses, which include stock-based compensation expense and employer payroll taxes in relation to the stock-based compensation, net deferred compensation plan expense, amortization of acquisition-related intangible assets and related tax effects. Non-GAAP net income and non-GAAP net income per share also exclude the recognition of a tax benefit granted to a foreign subsidiary. Non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP operating income excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP other income, net excludes the effect of deferred compensation plan income. Non-GAAP income before income taxes excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and net deferred compensation plan expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, and amortization of acquisition-related intangible assets. Projected non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors’ understanding of MPS’s core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS. See the GAAP to non-GAAP reconciliations in the tables set forth below.

    Earnings Commentary
    Earnings commentary on the results of operations for the quarter and year ended December 31, 2024 is available under the Investor Relations page on the MPS website.

    Earnings Webinar
    MPS plans to host a question-and-answer conference call covering its financial results at 2:00 p.m. PT / 5:00 p.m. ET, February 6, 2025. The live event will be held via a Zoom webcast, which can be accessed at: https://mpsic.zoom.us/j/96816578886. The Zoom webcast can also be accessed live over the phone by dialing (669) 444-9171; the webcast ID is 96816578886. A replay of the event will be archived and available for replay for one year under the Investor Relations page on the MPS website.

    Safe Harbor Statement
    This press release contains, and statements that will be made during the accompanying webinar will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including under the “Business Outlook” section and the quote from our CEO herein, including, among other things, (i) projected revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, stock-based compensation and related expenses, amortization of acquisition-related intangible assets, other income before foreign exchange gains or losses, and fully diluted shares outstanding, (ii) our outlook for the first quarter of fiscal year 2025 and the near-term, medium-term and long-term prospects of MPS, including our ability to adapt to changing market conditions, performance against our business plan, our ability to grow despite the various challenges facing our business, our industry and the global economic environment, revenue growth in certain of our market segments, potential new business segments, our continued investment in research and development (“R&D”), expected revenue growth, customers’ acceptance of our new product offerings, the prospects of our new product development, our expectations regarding market and industry segment trends and prospects, and our projected expansion of capacity and the impact it may have on our business, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, and (vi) statements regarding the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, continued uncertainties in the global economy, including due to the Russia-Ukraine and Middle East conflicts, inflation, consumer sentiment and other factors; adverse events arising from orders or regulations of governmental entities, including such orders or regulations that impact our customers or suppliers, and adoption of new or amended accounting standards; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, and tax laws or the interpretation of same, including in foreign countries where MPS has offices or operations; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; acceptance of, or demand for, our products, in particular the new products launched recently, being different than expected; our ability to increase market share in our targeted markets; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies (including as a result of any continuing impact from the Russia-Ukraine and Middle East conflicts); our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to attract new customers and retain existing customers; our ability to meet customer demand for our products due to constraints on our third-party suppliers’ ability to manufacture sufficient quantities of our products or otherwise; our ability to expand manufacturing capacity to support future growth; adverse changes in production and testing efficiency of our products; any political, cultural, military, regulatory, economic, foreign exchange and operational changes in China, where a significant portion of our manufacturing capacity comes from; any market disruptions or interruptions in our schedule of new product development releases; our ability to manage our inventory levels; adequate supply of our products from our third-party manufacturing partners; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; the ongoing consolidation of companies in the semiconductor industry; competition generally and the increasingly competitive nature of our industry; our ability to realize the anticipated benefits of companies and products that MPS acquires, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; the risks, uncertainties and costs of litigation in which MPS is involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on our financial performance if its tax and litigation provisions are inadequate; our ability to effectively manage our growth and attract and retain qualified personnel; the effect of epidemics and pandemics on the global economy and on our business; the risks associated with the financial market, economy and geopolitical uncertainties, including the collapse of certain banks in the U.S. and elsewhere and the Russia-Ukraine and Middle East conflicts; and other important risk factors identified under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our Annual Report on Form 10-K filed with the SEC on February 29, 2024. MPS assumes no obligation to update the information in this press release or in the accompanying webinar.

    About Monolithic Power Systems

    Monolithic Power Systems, Inc. (“MPS”) is a fabless global company that provides high-performance, semiconductor-based power electronics solutions. MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life. Founded in 1997 by our CEO Michael Hsing, MPS has three core strengths: deep system-level knowledge, strong semiconductor expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging. These combined advantages enable MPS to deliver reliable, compact, and monolithic solutions that are highly energy-efficient, cost-effective, and environmentally responsible while providing a consistent return on investment to our stockholders. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.

    Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries. 

    Contact:
    Bernie Blegen
    Executive Vice President and Chief Financial Officer
    Monolithic Power Systems, Inc.
    408-826-0777
    MPSInvestor.Relations@monolithicpower.com

     
    Monolithic Power Systems, Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited, in thousands, except par value)
     
        December 31,   December 31,
        2024   2023
    ASSETS                
    Current assets:                
    Cash and cash equivalents   $ 691,816     $ 527,843  
    Short-term investments     171,130       580,633  
    Accounts receivable, net     172,518       179,858  
    Inventories     419,611       383,702  
    Other current assets     109,978       147,463  
    Total current assets     1,565,053       1,819,499  
    Property and equipment, net     494,945       368,952  
    Acquisition-related intangible assets, net     9,938       –  
    Goodwill     25,944       6,571  
    Deferred tax assets, net     1,326,840       28,054  
    Other long-term assets     194,377       211,277  
    Total assets   $ 3,617,097     $ 2,434,353  
                     
    LIABILITIES AND STOCKHOLDERS’ EQUITY                
    Current liabilities:                
    Accounts payable   $ 102,526     $ 62,958  
    Accrued compensation and related benefits     63,918       56,286  
    Other accrued liabilities     128,123       115,791  
    Total current liabilities     294,567       235,035  
    Income tax liabilities     65,193       60,724  
    Other long-term liabilities     111,570       88,655  
    Total liabilities     471,330       384,414  
    Commitments and contingencies                
    Stockholders’ equity:                
    Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 47,823 and 48,028, respectively     706,817       1,129,937  
    Retained earnings     2,487,461       947,064  
    Accumulated other comprehensive loss     (48,511 )     (27,062 )
    Total stockholders’ equity     3,145,767       2,049,939  
    Total liabilities and stockholders’ equity   $ 3,617,097     $ 2,434,353  
     
    Monolithic Power Systems, Inc.
    Condensed Consolidated Statements of Operations
    (Unaudited, in thousands, except per share amounts)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Revenue   $ 621,665     $ 454,012     $ 2,207,100     $ 1,821,072  
    Cost of revenue     277,257       202,889       986,230       799,953  
    Gross profit     344,408       251,123       1,220,870       1,021,119  
    Operating expenses:                                
    Research and development     85,762       71,459       324,748       263,643  
    Selling, general and administrative     95,339       70,095       356,764       275,740  
    Total operating expenses     181,101       141,554       681,512       539,383  
    Operating income     163,307       109,569       539,358       481,736  
    Other income, net     6,224       9,976       33,554       24,105  
    Income before income taxes     169,531       119,545       572,912       505,841  
    Income tax expense (benefit), net     (1,279,832 )     22,640       (1,213,788 )     78,467  
    Net income   $ 1,449,363     $ 96,905     $ 1,786,700     $ 427,374  
                                     
    Net income per share:                                
    Basic   $ 30.00     $ 2.02     $ 36.76     $ 8.98  
    Diluted   $ 29.88     $ 1.98     $ 36.59     $ 8.76  
    Weighted-average shares outstanding:                                
    Basic     48,317       47,936       48,599       47,610  
    Diluted     48,506       48,881       48,835       48,771  
     
    SUPPLEMENTAL FINANCIAL INFORMATION
    STOCK-BASED COMPENSATION EXPENSE
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Cost of revenue   $ 1,720     $ 1,228     $ 6,305     $ 4,545  
    Research and development     12,166       10,204       45,626       36,611  
    Selling, general and administrative     42,124       29,675       153,709       108,555  
    Total stock-based compensation expense   $ 56,010     $ 41,107     $ 205,640     $ 149,711  
     
    RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
     (Unaudited, in thousands, except per share amounts)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Net income   $ 1,449,363     $ 96,905     $ 1,786,700     $ 427,374  
                                     
    Adjustments to reconcile net income to non-GAAP net income:                                
    Stock-based compensation and related expenses*     56,320       41,107       213,209       149,711  
    Amortization of acquisition-related intangible assets     320       33       1,303       132  
    Deferred compensation plan expense, net     573       288       867       1,055  
    Tax effect of non-GAAP adjustments     (22,773 )     2,519       (26,922 )     (3,625 )
    Recognition of a tax benefit granted to a foreign subsidiary     (1,285,402 )     –       (1,285,402 )     –  
    Non-GAAP net income   $ 198,401     $ 140,852     $ 689,755     $ 574,647  
                                     
    Non-GAAP net income per share:                                
    Basic   $ 4.11     $ 2.94     $ 14.19     $ 12.07  
    Diluted   $ 4.09     $ 2.88     $ 14.12     $ 11.78  
                                     
    Shares used in the calculation of non-GAAP net income per share:                                
    Basic     48,317       47,936       48,599       47,610  
    Diluted     48,506       48,881       48,835       48,771  
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Gross profit   $ 344,408     $ 251,123     $ 1,220,870     $ 1,021,119  
    Gross margin     55.4 %     55.3 %     55.3 %     56.1 %
                                     
    Adjustments to reconcile gross profit to non-GAAP gross profit:                                
    Stock-based compensation and related expenses*     1,745       1,228       6,975       4,545  
    Amortization of acquisition-related intangible assets     287       –       1,171       –  
    Deferred compensation plan expense     417       486       1,500       871  
    Non-GAAP gross profit   $ 346,857     $ 252,837     $ 1,230,516     $ 1,026,535  
    Non-GAAP gross margin     55.8 %     55.7 %     55.8 %     56.4 %
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
     (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Total operating expenses   $ 181,101     $ 141,554     $ 681,512     $ 539,383  
                                     
    Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:                                
    Stock-based compensation and related expenses*     (54,575 )     (39,879 )     (206,234 )     (145,166 )
    Amortization of acquisition-related intangible assets     (33 )     (33 )     (132 )     (132 )
    Deferred compensation plan expense     (376 )     (4,897 )     (8,767 )     (8,690 )
    Non-GAAP operating expenses   $ 126,117     $ 96,745     $ 466,379     $ 385,395  
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
     (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Total operating income   $ 163,307     $ 109,569     $ 539,358     $ 481,736  
                                     
    Adjustments to reconcile total operating income to non-GAAP total operating income:                                
    Stock-based compensation and related expenses*     56,320       41,107       213,209       149,711  
    Amortization of acquisition-related intangible assets     320       33       1,303       132  
    Deferred compensation plan expense     793       5,383       10,267       9,561  
    Non-GAAP operating income   $ 220,740     $ 156,092     $ 764,137     $ 641,140  
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    RECONCILIATION OF OTHER INCOME, NET, TO NON-GAAP OTHER INCOME, NET
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Total other income, net   $ 6,224     $ 9,976     $ 33,554     $ 24,105  
                                     
    Adjustments to reconcile other income, net to non-GAAP other income, net:                                
    Deferred compensation plan income     (220 )     (5,095 )     (9,400 )     (8,506 )
    Non-GAAP other income, net   $ 6,004     $ 4,881     $ 24,154     $ 15,599  
     
    RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
    (Unaudited, in thousands)
     
        Three Months Ended December 31,   Year Ended December 31,
        2024   2023   2024   2023
    Total income before income taxes   $ 169,531     $ 119,545     $ 572,912     $ 505,841  
                                     
    Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:                                
    Stock-based compensation and related expenses*     56,320       41,107       213,209       149,711  
    Amortization of acquisition-related intangible assets     320       33       1,303       132  
    Deferred compensation plan expense, net     573       288       867       1,055  
    Non-GAAP income before income taxes   $ 226,744     $ 160,973     $ 788,291     $ 656,739  
     
    *Prior periods exclude stock-based compensation related employer payroll taxes from non-GAAP measures due to immateriality.
     
    2025 FIRST QUARTER OUTLOOK
     RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
    (Unaudited)
     
        Three Months Ending
        March 31, 2025
        Low   High
    Gross margin     55.1 %     55.7 %
    Adjustment to reconcile gross margin to non-GAAP gross margin:                
    Stock-based compensation and other expenses     0.3 %     0.3 %
    Non-GAAP gross margin     55.4 %     56.0 %
     
    RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
    (Unaudited, in thousands)
     
        Three Months Ending
        March 31, 2025
        Low   High
    Operating expenses   $ 180,200     $ 186,200  
    Adjustments to reconcile operating expenses to non-GAAP operating expenses:                
    Stock-based compensation and other expenses     (53,300 )     (55,300 )
    Non-GAAP operating expenses   $ 126,900     $ 130,900  

    The MIL Network –

  • MIL-OSI Asia-Pac: Shri Jayant Chaudhary inaugurates NSDC International Academy at Greater Noida

    Source: Government of India (2)

    Shri Jayant Chaudhary inaugurates NSDC International Academy at Greater Noida

    The state-of-the-art facility to provide world-class skill development & training programmes

    The academy to empower youth in foreign languages and prepare them for international career opportunities

    Posted On: 06 FEB 2025 6:38PM by PIB Delhi

    Shri Jayant Chaudhary, Minister of State (I/C), Ministry of Skill Development and Entrepreneurship (MSDE) and Minister of State, Ministry of Education inaugurated the NSDC International Academy at Greater Noida, Uttar Pradesh. The academy is a state-of-the-art facility designed to provide world-class skill development and training programmes.

    The NSDC International Academy is a landmark initiative designed to bridge the gap between Indian youth and global employment opportunities. It will serve as a centre of excellence, offering specialized training programs aligned with the skill demands of countries like Germany, Japan, and Israel. Shri Chaudhary flagged off the departure of 11 candidates headed to Germany. He toured the NSDC International Academy, interacted with students about their life journeys, and offered them motivation and also experienced the AI and VR facilities, advanced labs present at the centre.

     

    Delivering his address, Shri Jayant Chaudhary, mentioned, “We must recognize that young India is breaking barriers, moving beyond traditional career paths, and looking at new opportunities. Institutions like these are testament to this shift—equipping our youth with the skills, confidence, and global exposure they need to succeed. A great building and infrastructure are important, but the real strength of any institution is its people—the trainers, students, and programs that drive it. With our skilling budget increasing substantially, we are strengthening initiatives like this academy, ensuring young Indians get industry-relevant training, language skills, and cultural readiness. A Viksit Bharat by 2047 will be built by individuals ready to take on global challenges, and our job is to make sure they have the right support to get there.”

     

     

    He added, “Prime Minister Shri Narendra Modi Ji is very passionate about skilling, and takes pride in what our ministry is achieving. Skill India programme and ITI rejuvenation programme, announced in the budget will have a huge impact, in increasing our capacity to skill our young people.”

    This centre aims to empower individuals with the skills needed to thrive in today’s competitive global workforce. The academy specializes in internationally recognized language certifications, ensuring that candidates receive globally accepted qualifications. These include OSD and GOETHE certifications for German, JLPT for Japanese, and ISLETS for English, making graduates well-prepared for global opportunities.

    Addressing the audience, Shri Ved Mani Tiwari, CEO, Nation Skill Development Corporation said, “In our journey of making India a global skill capital, today is a pivotal moment as our honorable minister Shri Jayant Chaudhary inaugurates this center, fulfilling the dreams of our honorable prime minister Shri Narendra Modi Ji. The World Economic Forum report says that in the next 25 years, 100 crore people would join the global workforce, with every third and fourth person being Indian. The coming years would ensure that India plays a dominant role in the global economy and contributes significantly to the dollar economy. Our initiatives at this center equip youths with world-class language proficiency and advanced technical skills, preparing them for careers in Germany, Japan, Israel, and the UK. With cutting-edge training in sectors like caregiving and with the support of Industry 4.0, we are readying our talent for global opportunities.”

    With a target of training over 1,000 candidates annually, the NSDC International Academy is committed to addressing the demands of both local and international job markets. As part of its mission to enhance employability, the academy will provide placement assistance and establish partnerships with industry leaders to facilitate valuable interview opportunities for its graduates.

    The NSDC International Academy in Greater Noida stands as a flagship initiative, of the National Skill Development Corporation (NSDC) under the Ministry of Skill Development & Entrepreneurship (MSDE), Government of India, dedicated to transforming India’s workforce by providing training and certifications recognised globally. This premier skill development institution offers specialised courses in various fields, including foreign languages, healthcare, employability skills, and aviation, ensuring that Indian youth are well-prepared for international career opportunities.

    The facility features modern classrooms equipped with interactive technology and advanced labs focused on soft skills and language learning with resources that will enable hands-on training and practical application of the learnings. The academy also includes dedicated counselling rooms to provide career guidance and psychological support, fostering holistic development among students. With residential facilities accommodating up to 500 candidates, the NSDC International Academy offers an immersive learning environment that promotes both academic and personal growth.

    With a target of training over 1,000 candidates annually, the NSDC International Academy is committed to addressing the demands of both local and international job markets. As part of its mission to enhance employability, the academy will provide placement assistance and establish partnerships with industry leaders to facilitate valuable interview opportunities for its graduates.

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    MIL OSI Asia Pacific News –

  • MIL-OSI Asia-Pac: Shri Jayant Chaudhary inaugurates NSDC International Academy

    Source: Government of India

    Shri Jayant Chaudhary inaugurates NSDC International Academy

    The state-of-the-art facility to provide world-class skill development & training programmes

    The academy to empower youth in foreign languages and prepare them for international career opportunities

    Posted On: 06 FEB 2025 6:38PM by PIB Delhi

    Shri Jayant Chaudhary, Minister of State (I/C), Ministry of Skill Development and Entrepreneurship (MSDE) and Minister of State, Ministry of Education inaugurated the NSDC International Academy, a state-of-the-art facility designed to provide world-class skill development and training programmes.

    The NSDC International Academy is a landmark initiative designed to bridge the gap between Indian youth and global employment opportunities. It will serve as a centre of excellence, offering specialized training programs aligned with the skill demands of countries like Germany, Japan, and Israel. Shri Chaudhary flagged off the departure of 11 candidates headed to Germany. He toured the NSDC International Academy, interacted with students about their life journeys, and offered them motivation and also experienced the AI and VR facilities, advanced labs present at the centre.

     

    Delivering his address, Shri Jayant Chaudhary, mentioned, “We must recognize that young India is breaking barriers, moving beyond traditional career paths, and looking at new opportunities. Institutions like these are testament to this shift—equipping our youth with the skills, confidence, and global exposure they need to succeed. A great building and infrastructure are important, but the real strength of any institution is its people—the trainers, students, and programs that drive it. With our skilling budget increasing substantially, we are strengthening initiatives like this academy, ensuring young Indians get industry-relevant training, language skills, and cultural readiness. A Viksit Bharat by 2047 will be built by individuals ready to take on global challenges, and our job is to make sure they have the right support to get there.”

     

     

    He added, “Prime Minister Shri Narendra Modi Ji is very passionate about skilling, and takes pride in what our ministry is achieving. Skill India programme and ITI rejuvenation programme, announced in the budget will have a huge impact, in increasing our capacity to skill our young people.”

    This centre aims to empower individuals with the skills needed to thrive in today’s competitive global workforce. The academy specializes in internationally recognized language certifications, ensuring that candidates receive globally accepted qualifications. These include OSD and GOETHE certifications for German, JLPT for Japanese, and ISLETS for English, making graduates well-prepared for global opportunities.

    Addressing the audience, Shri Ved Mani Tiwari, CEO, Nation Skill Development Corporation said, “In our journey of making India a global skill capital, today is a pivotal moment as our honorable minister Shri Jayant Chaudhary inaugurates this center, fulfilling the dreams of our honorable prime minister Shri Narendra Modi Ji. The World Economic Forum report says that in the next 25 years, 100 crore people would join the global workforce, with every third and fourth person being Indian. The coming years would ensure that India plays a dominant role in the global economy and contributes significantly to the dollar economy. Our initiatives at this center equip youths with world-class language proficiency and advanced technical skills, preparing them for careers in Germany, Japan, Israel, and the UK. With cutting-edge training in sectors like caregiving and with the support of Industry 4.0, we are readying our talent for global opportunities.”

    With a target of training over 1,000 candidates annually, the NSDC International Academy is committed to addressing the demands of both local and international job markets. As part of its mission to enhance employability, the academy will provide placement assistance and establish partnerships with industry leaders to facilitate valuable interview opportunities for its graduates.

    The NSDC International Academy in Greater Noida stands as a flagship initiative, of the National Skill Development Corporation (NSDC) under the Ministry of Skill Development & Entrepreneurship (MSDE), Government of India, dedicated to transforming India’s workforce by providing training and certifications recognised globally. This premier skill development institution offers specialised courses in various fields, including foreign languages, healthcare, employability skills, and aviation, ensuring that Indian youth are well-prepared for international career opportunities.

    The facility features modern classrooms equipped with interactive technology and advanced labs focused on soft skills and language learning with resources that will enable hands-on training and practical application of the learnings. The academy also includes dedicated counselling rooms to provide career guidance and psychological support, fostering holistic development among students. With residential facilities accommodating up to 500 candidates, the NSDC International Academy offers an immersive learning environment that promotes both academic and personal growth.

    With a target of training over 1,000 candidates annually, the NSDC International Academy is committed to addressing the demands of both local and international job markets. As part of its mission to enhance employability, the academy will provide placement assistance and establish partnerships with industry leaders to facilitate valuable interview opportunities for its graduates.

    ****

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    (Release ID: 2100397) Visitor Counter : 56

    MIL OSI Asia Pacific News –

  • MIL-OSI Europe: Answer to a written question – Protecting the competitiveness of the European cement industry – E-002800/2024(ASW)

    Source: European Parliament

    The Carbon Border Adjustment Mechanism (CBAM) will ensure that the carbon price of cement imported into the EU is equivalent to the carbon price of domestic production under the EU Emissions Trading System (EU ETS).

    Under the EU ETS, the number of free emission allowances declines over time for all sectors. For CBAM sectors like cement, the decline accelerates as from 2026 to maximise the impact of the ETS in fulfilling the EU’s climate goals.

    In line with the phase-out of the allocation of free allowances under the EU ETS, the CBAM financial adjustment is phased in gradually.

    As required by the CBAM Regulation, a report on the application of the CBAM is foreseen in 2025 before the end of the transitional phase[1].

    In view of the expiration of the Autonomous Trade Measures for Ukraine in June 2025, the Commission is working on a review of reciprocal trade liberalisation under Article 29 of the Association Agreement.

    However, since cement was already fully liberalised by the original Association Agreement, it was not affected by the Autonomous Trade Measures nor is it within the scope of the review.

    The Commission is aware of the challenges that companies and households face due to high energy prices. The EU has jointly responded to Russia’s energy market manipulation and the subsequent high inflation.

    The energy dimension of the Clean Industrial Deal and the forthcoming Action Plan for Affordable Energy will address the high energy prices and aim at unlocking all possible decarbonisation pathways for EU industries. Further fuel switches and energy efficiency improvements can also help to reduce energy costs.

    • [1] Regulation (EU) 2023/956, Article 30(2).
    Last updated: 6 February 2025

    MIL OSI Europe News –

  • MIL-OSI: Glen Burnie Bancorp Announces Fourth Quarter and Full Year 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    GLEN BURNIE, Md., Feb. 06, 2025 (GLOBE NEWSWIRE) — Glen Burnie Bancorp (“Bancorp”) (NASDAQ: GLBZ), the bank holding company for The Bank of Glen Burnie (“Bank”), announced today net loss of $39,000, or -$0.01 per basic and diluted common share, for the three-month period ended December 31, 2024, compared to net income of $167,000, or $0.06 per basic and diluted common share, for the three-month period ended December 31, 2023. Bancorp reported a net loss of $112,000, or -$0.04 per basic and diluted common share, for the twelve-month period ended December 31, 2024, compared to net income of $1.4 million, or $0.50 per basic and diluted common share, for the same period in 2023. On December 31, 2024, Bancorp had total assets of $358.9 million. Bancorp is the oldest independent commercial bank in Anne Arundel County.

    “Our financial performance in 2024 is disappointing and represents the challenges inherent in navigating the interest rate environment of the last several years. The Company’s focus on generating additional interest-earning assets at higher current market interest rates and rebuilding our base of core, low-cost deposits was moderately successful,” said Mark C. Hanna, President, and Chief Executive Officer. “Despite the challenges of declining net interest income, the Company’s financial strength is reflected in a strong capital position, available liquidity, and prudent expense management. Although interest expense increased significantly in year over year comparisons, loan growth of $28.9 million and higher yields on earning assets contributed to expanded interest income that partially offset higher interest expense and helped mitigate margin compression.”

    In closing, Mr. Hanna added, “To invest in strategic opportunities that will benefit the long-term performance of the Bank, the difficult decision was made to change the longstanding practice of approving quarterly cash dividends for shareholders. As the Bank evaluates our next 75 years, we are committed to our business model and the economic strength of the communities we serve. To better serve the evolving needs of our clients, there is a need to reinvest in our people, technology, products, and facilities. Based on our capital levels, conservative underwriting policies, on- and off-balance sheet liquidity, strong loan diversification, and current economic conditions within the markets we serve, management expects to navigate the uncertainties and remain well-capitalized. Our focus remains continued execution on our strategic priorities to generate organic loan and deposit growth.”

    Highlights for the Quarter and Year ended December 31, 2024

    Despite growth in loans and deposits for the twelve-month period ending December 31, 2024, net interest income decreased $1.2 million, or 9.84% to $10.9 million through December 31, 2024, as compared to $12.1 million during the same period of 2023. The decrease resulted primarily from a $3.1 million increase in interest expenses, offset by a $1.9 million increase in interest and fees on loans. The $2.0 million increase in interest on deposits was driven by the higher cost of money market deposit balances. The $1.0 million increase in interest on borrowings was driven by a $20.1 million increase in the average balance of borrowed funds due to the elevated level of deposit runoff that occurred in 2023.

    Total interest income increased $1.9 million to $15.2 million for the twelve-month period ending December 31, 2024, compared to the same period in 2023 as the result of a $1.9 million increase in interest and fees on loans. The increase in interest income was driven by rate adjustments on loans offerings consistent with the higher interest rate environment. However, loan pricing pressure/competition will continue to place pressure on the Company’s net interest margin.

    The Company expects that its strong liquidity and capital positions, along with the Bank’s total regulatory capital to risk weighted assets of 16.40% on December 31, 2024, compared to 18.40% for the same period of 2023, will provide ample capacity for future growth.

    Return on average assets for the three-month period ended December 31, 2024, was -0.04%, compared to 0.19% for the three-month period ended December 31, 2023. Return on average equity for the three-month period ended December 31, 2024, was -0.75%, compared to 4.65% for the three-month period ended December 31, 2023. Lower net income and higher average balances drove the lower return on average assets and the lower return on average equity.

    The cost of funds was 1.38% for the quarter ended December 31, 2024, compared to 0.64% for the quarter ended December 31, 2023. The 0.74% increase was primarily driven by the increase in the cost of money market deposits and borrowed funds.

    The book value per share of Bancorp’s common stock was $6.14 on December 31, 2024, compared to $6.70 per share on December 31, 2023. The decrease was primarily due to the increase in unrealized losses on available for sale securities caused by higher market interest rates.

    On December 31, 2024, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was approximately 15.15% on December 31, 2024, compared to 17.37% on December 31, 2023. Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the bond portfolio.

    Balance Sheet Review

    Total assets were $358.9 million on December 31, 2024, an increase of $7.1 million or 2.03%, from $351.8 million on December 31, 2023. Investment securities decreased by $31.5 million or 22.58%, to $107.9 million as of December 31, 2024, compared to $139.4 million for the same period of 2023. Loans, net of deferred fees and costs, were $205.2 million on December 31, 2024, an increase of $28.9 million or 16.40%, from $176.3 million on December 31, 2023. Cash and cash equivalents increased $9.2 million or 60.51%, from $15.2 million on December 31, 2023, to $24.4 million on December 31, 2024.

    Total deposits were $309.2 million on December 31, 2024, an increase of $9.1 million or 3.04%, from $300.1 million on December 31, 2023. Noninterest-bearing deposits were $100.7 million on December 31, 2024, a decrease of $16.2 million or 13.83%, from $116.9 million on December 31, 2023. Interest-bearing deposits were $208.4 million on December 31, 2024, an increase of $25.3 million or 13.81%, from $183.1 million on December 31, 2023. Total borrowings were $30.0 million on December 31, 2024, unchanged from December 31, 2023.

    As of December 31, 2024, total stockholders’ equity was $17.8 million (4.96% of total assets), equivalent to a book value of $6.14 per common share. Total stockholders’ equity on December 31, 2023, was $19.3 million (5.49% of total assets), equivalent to a book value of $6.70 per common share. The decrease in the ratio of stockholders’ equity to total assets was primarily due to the $1.5 million decline in net earnings for the year ended December 31, 2024 compared to the prior year, the $0.6 million after-tax increase in market value loss on the Company’s available-for-sale securities portfolio and a $7.1 million increase in total assets. The increase in unrealized losses primarily resulted from increasing market interest rates year-over-year, which decreased the fair value of the investment securities.

    Asset quality, which has trended within a narrow range over the past several years, remained sound on December 31, 2024. Nonperforming assets, which consist of nonaccrual loans, loans to borrowers experiencing financial difficulty, accruing loans past due 90 days or more, and other real estate owned (“OREO”), represented 0.10% of total assets on December 31, 2024, compared to 0.15% on December 31, 2023. The $7.1 million increase in total assets from December 31, 2023, to December 31, 2024, and the $167,000 decrease in nonperforming assets drove the 0.05% decline. The allowance for credit losses on loans was $2.8 million, or 1.38% of total loans, as of December 31, 2024, compared to $2.2 million, or 1.22% of total loans, as of December 31, 2023. The allowance for credit losses for unfunded commitments was $584,000 as of December 31, 2024, compared to $473,000 as of December 31, 2023.

    Review of Financial Results

    For the three-month periods ended December 31, 2024, and 2023

    Net loss for the three-month period ended December 31, 2024, was $39,000, compared to net income of $167,000 for the three-month period ended December 31, 2023.

    Net interest income for the three-month period ended December 31, 2024, totaled $2.8 million, a decrease of $128,000 from the three-month period ended December 31, 2023. Despite a $520,000 increase in interest income, the decrease in net interest income was primarily due to a $648,000 increase in interest expenses predominantly related to the advantage money market deposit product.

    Net interest margin for the three-month period ended December 31, 2024, was 2.98%, compared to 3.17% for the same period of 2023. Higher average yields and balances on interest-earning assets combined with higher average interest-bearing funds, lower average noninterest-bearing funds, and higher cost of funds were the primary drivers of year-over-year results.

    The average balance of interest-earning assets increased $7.1 million while the yield increased 0.50% from 3.77% to 4.27%, when comparing the three-month periods ending December 31, 2023, and 2024, respectively. The average balance of interest-bearing funds increased $28.9 million, the average balance of noninterest-bearing funds decreased $21.3 million, and the cost of funds increased 0.74%, when comparing the three-month periods ending December 31, 2023, and 2024, respectively.

    The average balance of interest-bearing deposits in banks and investment securities decreased $22.1 million from $185.9 million to $163.8 million for the fourth quarter of 2024, compared to the same period of 2023 while the yield increased 0.01% from 2.68% to 2.69% during that same period.

    Average loan balances increased $29.2 million to $204.7 million for the three-month period ended December 31, 2024, compared to $175.5 million for the same period of 2023, while the yield increased from 4.96% to 5.54% during that same period. The increase in loan yields for the fourth quarter of 2024 reflected continued runoff of the low-yielding indirect automobile loan portfolio and new loan originations at higher yields.

    The provision of allowance for credit loss on loans for the three-month period ended December 31, 2024, was $71,000, compared to $103,000 for the same period of 2023.

    Noninterest income for the three-month period ended December 31, 2024, was $332,000, compared to $299,000 for the three-month period ended December 31, 2023, an increase of $33,000 or 11.04%. The increase was primarily driven by a $31,000 casualty gain due to insurance proceeds exceeding the book value of assets destroyed by water damage.

    For the three-month period ended December 31, 2024, noninterest expense was $3.1 million, compared to $2.9 million for the three-month period ended December 31, 2023, an increase of $171,000 or 5.82%. The primary contributors to the $171,000 increase, when compared to the three-month period ended December 31, 2023, were increases in salary and employee benefits, legal, accounting, and other professional fees, data processing and item processing services and other expenses.

    For the twelve-month periods ended December 31, 2024, and 2023

    Net loss for the twelve-month period ended December 31, 2024, was $112,000, compared to net income of $1.4 million for the twelve-month period ended December 31, 2023.

    Net interest income for the twelve-month period ended December 31, 2024, totaled $10.9 million, a decrease of $1.2 million from $12.1 million for the twelve-month period ended December 31, 2023. The decrease in net interest income was primarily due to a $3.1 million increase in interest expenses related to growth of the advantage money market deposit product balances and short-term borrowings necessitated by the deposit runoff during 2023, offset by $1.9 million higher interest and fees on loans.

    Net interest margin for the twelve-month period ended December 31, 2024, was 2.98%, compared to 3.31% for the same period of 2023. Higher average yields and lower average balances of interest-earning assets combined with higher average interest-bearing funds, lower average noninterest-bearing funds, and higher cost of funds were the primary drivers of year-over-year results.

    The average balance of interest-earning assets decreased $252,000, while the yield increased 0.52% from 3.63% to 4.15%, when comparing the twelve-month periods ending December 31, 2023, and 2024, respectively. The average balance of interest-bearing funds increased $20.2 million, the average balance of noninterest-bearing funds decreased $20.3 million, and the cost of funds increased 0.90%, when comparing the twelve-month periods ending December 31, 2023, and 2024, respectively.

    The average balance of interest-bearing deposits in banks and investment securities decreased $13.1 million from $187.4 million to $174.3 million for the twelve-month period ending December 31, 2024, compared to the same period of 2023. The yield increased 0.16% from 2.55% to 2.71% during that same period. The increase in yields for the twelve-month period can be attributed to the change in the mix of cash balances held in interest-bearing deposits in banks and investment securities available for sale and increases in the overnight federal funds rate between the years.

    Average loan balances increased $12.8 million to $192.6 million for the twelve-month period ended December 31, 2024, compared to $179.8 million for the same period of 2023. The yield increased 0.69% from 4.76% to 5.45% during that same period. The increase in loan yields for the twelve-month period ending December 31, 2024, reflected continued runoff of the low-yielding indirect automobile loan portfolio and new loan originations at higher yields.

    The Company recorded a provision of allowance for credit loss on loans of $844,000 for the twelve-month period ending December 31, 2024, compared to $96,000 for the same period in 2023. The $748,000 increase in the provision in 2024 compared to 2023, primarily reflects a $61,000 increase in net charge offs, a $28.2 million increase in the reservable balance of the loan portfolio and a 0.16% increase in the current expected credit loss percentage. As a result, the allowance for credit loss on loans was $2.8 million on December 31, 2024, representing 1.38% of total loans, compared to $2.2 million, or 1.22% of total loans on December 31, 2023.

    Noninterest income for the twelve-month period ended December 31, 2024, was $1.2 million, compared to $1.1 million for the twelve-month period ended December 31, 2023, an increase of $57,000 or 5.20%. The increase was driven primarily by a $52,000 increase in other fees and commissions which included a $31,000 casualty gain due to insurance proceeds exceeding the book value of assets destroyed by water damage.

    For the twelve-month period ended December 31, 2024, noninterest expense was $11.9 million, compared to $11.6 million for the twelve-month period ended December 31, 2023. The primary contributors to the $253,000 increase when compared to the twelve-month period ended December 31, 2023, were increases in legal, accounting, and other professional fees, occupancy and equipment expenses, and other expenses which included the allowance for unfunded commitments, partially offset by decreases in salary and employee benefits costs.

    Glen Burnie Bancorp Information

    Glen Burnie Bancorp is a bank holding company headquartered in Glen Burnie, Maryland. Founded in 1949, The Bank of Glen Burnie® is a locally owned community bank with seven branch offices serving Anne Arundel County. The Bank is engaged in the commercial and retail banking business including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships, and corporations. The Bank’s real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans. The Bank also originates automobile loans through arrangements with local automobile dealers. Additional information is available at www.thebankofglenburnie.com.

    Forward-Looking Statements

    The statements contained herein that are not historical financial information may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, which could cause the company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. For a more complete discussion of these and other risk factors, please see the company’s reports filed with the Securities and Exchange Commission.

             
    GLEN BURNIE BANCORP AND SUBSIDIARY
    CONSOLIDATED BALANCE SHEETS
    (dollars in thousands)
               
               
      December 31,   September 30,   December 31,
      2024   2024   2023
      (unaudited)   (unaudited)   (audited)
    ASSETS          
    Cash and due from banks $ 2,012     $ 2,255     $ 1,940  
    Interest-bearing deposits in other financial institutions   22,452       20,207       13,301  
    Total Cash and Cash Equivalents   24,464       22,462       15,241  
               
    Investment securities available for sale, at fair value   107,949       119,958       139,427  
    Restricted equity securities, at cost   1,671       246       1,217  
               
    Loans, net of deferred fees and costs   205,219       206,975       176,307  
    Less: Allowance for credit losses   (2,839 )     (2,748 )     (2,157 )
    Loans, net   202,380       204,227       174,150  
               
    Premises and equipment, net   2,630       2,723       3,046  
    Bank owned life insurance   8,834       8,789       8,657  
    Deferred tax assets, net   8,548       6,879       7,897  
    Accrued interest receivable   1,345       1,478       1,192  
    Accrued taxes receivable   148       497       121  
    Prepaid expenses   471       486       475  
    Other assets   516       614       390  
    Total Assets $ 358,956     $ 368,359     $ 351,813  
               
    LIABILITIES          
    Noninterest-bearing deposits $ 100,747     $ 115,938     $ 116,922  
    Interest-bearing deposits   208,442       198,335       183,145  
    Total Deposits   309,189       314,273       300,067  
               
    Short-term borrowings   30,000       30,000       30,000  
    Defined pension liability   330       329       324  
    Accrued expenses and other liabilities   1,620       2,597       2,097  
    Total Liabilities   341,139       347,199       332,488  
               
    STOCKHOLDERS’ EQUITY          
    Common stock, par value $1, authorized 15,000,000 shares, issued and outstanding 2,900,681; 2,900,681; 2,882,627; shares as of December 31, 2024, September 30, 2024, and December 31, 2023 respectively.   2,901       2,901       2,883  
    Additional paid-in capital   11,037       11,037       10,964  
    Retained earnings   22,882       22,921       23,859  
    Accumulated other comprehensive loss   (19,003 )     (15,699 )     (18,381 )
    Total Stockholders’ Equity   17,817       21,160       19,325  
    Total Liabilities and Stockholders’ Equity $ 358,956     $ 368,359     $ 351,813  
               
    GLEN BURNIE BANCORP AND SUBSIDIARY
    CONSOLIDATED STATEMENTS OF INCOME
    (dollars in thousands, except per share amounts)
    (unaudited)
                     
         Three Months Ended
    December 31,    		   Twelve Months Ended
    December 31,
          2024       2023       2024       2023  
    Interest income                                
    Interest and fees on loans   $ 2,851     $ 2,192     $ 10,498     $ 8,559  
    Interest and dividends on securities     773       1,082       3,379       4,147  
    Interest on deposits with banks and federal funds sold     332       162       1,335       631  
    Total Interest Income     3,956       3,436       15,212       13,337  
                                     
    Interest expense                                
    Interest on deposits     818       176       2,533       513  
    Interest on short-term borrowings     375       369       1,738       689  
    Total Interest Expense     1,193       545       4,271       1,202  
                                     
    Net Interest Income     2,763       2,891       10,941       12,135  
    Provision of credit loss allowance     71       103       844       96  
    Net interest income after release of credit loss provision     2,692       2,788       10,097       12,039  
                                     
    Noninterest income                                
    Service charges on deposit accounts     42       39       150       159  
    Other fees and commissions     245       217       829       777  
    Income on life insurance     45       43       178       164  
    Total Noninterest Income     332       299       1,157       1,100  
                                     
    Noninterest expenses                                
    Salary and employee benefits     1,708       1,621       6,580       6,710  
    Occupancy and equipment expenses     330       339       1,325       1,294  
    Legal, accounting and other professional fees     346       301       1,115       993  
    Data processing and item processing services     260       250       1,016       1,005  
    FDIC insurance costs     42       40       161       163  
    Advertising and marketing related expenses     29       25       117       97  
    Loan collection costs     13       8       25       22  
    Telephone costs     44       39       154       151  
    Other expenses     346       324       1,398       1,203  
    Total Noninterest Expenses     3,118       2,947       11,891       11,638  
                                     
    (Loss) income before income taxes     (94 )     140       (637 )     1,501  
    Income tax (benefit) expense     (55 )     (27 )     (525 )     72  
                                     
    Net income (loss)   $ (39 )   $ 167     $ (112 )   $ 1,429  
                                     
    Basic and diluted net income (loss) per common share   $ (0.01 )   $ 0.06     $ (0.04 )   $ 0.50  
                                     
    GLEN BURNIE BANCORP AND SUBSIDIARY
    CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
    For the twelve months ended December 31, 2024 and 2023
    (dollars in thousands)
    (unaudited)
                       
                  Accumulated    
          Additional       Other   Total
      Common   Paid-in   Retained   Comprehensive   Stockholders’
      Stock   Capital   Earnings   (Loss) Income   Equity
    Balance, December 31, 2022 $ 2,865     $ 10,862     $ 23,579     $ (21,252 )   $ 16,054  
                                           
    Net income   –       –       1,429       –       1,429  
    Cash dividends, $0.40 per share   –       –       (1,149 )     –       (1,149 )
    Dividends reinvested under dividend reinvestment plan   18       102       –       –       120  
    Other comprehensive income   –       –       –       2,871       2,871  
    Balance, December 31, 2023 $ 2,883     $ 10,964     $ 23,859     $ (18,381 )   $ 19,325  
                                           
                                           
                              Accumulated
    		        
              Additional
    		           Other
    		   Total
      Common
    		  Paid-in
    		   Retained
    		   Comprehensive
    		   Stockholders’
      Stock
    		   Capital
    		   Earnings
    		   Loss
    		   Equity
    Balance, December 31, 2023 $ 2,883     $ 10,964     $ 23,859     $ (18,381 )   $ 19,325  
                                           
    Net loss   –       –       (112 )     –       (112 )
    Cash dividends, $0.30 per share   –       –       (865 )     –       (865 )
    Dividends reinvested under dividend reinvestment plan   18       73       –       –       91  
    Other comprehensive loss   –       –       –       (622 )     (622 )
    Balance, December 31, 2024 $ 2,901     $ 11,037     $ 22,882     $ (19,003 )   $ 17,817  
                                           
    THE BANK OF GLEN BURNIE
    CAPITAL RATIOS
    (dollars in thousands)
    (unaudited)
                     
                  To Be Well
                  Capitalized Under
            To Be Considered   Prompt Corrective
            Adequately Capitalized Action Provisions
      Amount Ratio   Amount Ratio   Amount Ratio
    As of December 31, 2024:                
    Common Equity Tier 1 Capital $ 36,481 15.15 %   $ 10,837 4.50 %   $ 15,653 6.50 %
    Total Risk-Based Capital $ 39,496 16.40 %   $ 19,265 8.00 %   $ 24,082 10.00 %
    Tier 1 Risk-Based Capital $ 36,481 15.15 %   $ 14,449 6.00 %   $ 19,265 8.00 %
    Tier 1 Leverage $ 36,481 9.97 %   $ 14,640 4.00 %   $ 18,300 5.00 %
                     
    As of September 30, 2024:                
    Common Equity Tier 1 Capital $ 36,755 15.47 %   $ 10,691 4.50 %   $ 15,443 6.50 %
    Total Risk-Based Capital $ 39,729 16.72 %   $ 19,006 8.00 %   $ 23,758 10.00 %
    Tier 1 Risk-Based Capital $ 36,755 15.47 %   $ 14,255 6.00 %   $ 19,006 8.00 %
    Tier 1 Leverage $ 36,755 10.11 %   $ 14,539 4.00 %   $ 18,173 5.00 %
                     
    As of December 31, 2023:                
    Common Equity Tier 1 Capital $ 37,975 17.37 %   $ 9,840 4.50 %   $ 14,213 6.50 %
    Total Risk-Based Capital $ 40,237 18.40 %   $ 17,493 8.00 %   $ 21,867 10.00 %
    Tier 1 Risk-Based Capital $ 37,975 17.37 %   $ 13,120 6.00 %   $ 17,493 8.00 %
    Tier 1 Leverage $ 37,975 10.76 %   $ 14,113 4.00 %   $ 17,641 5.00 %
                     
    GLEN BURNIE BANCORP AND SUBSIDIARY
    SELECTED FINANCIAL DATA
    (dollars in thousands, except per share amounts)
                         
                         
        Three Months Ended   Twelve Months Ended
        December 31 September 30 December 31 December 31   December 31
        2024   2024   2023   2024   2023
        (unaudited)   (unaudited)   (unaudited)   (unaudited)   (audited)
                         
    Financial Data                    
    Assets   $ 358,956     $ 368,359     $ 351,813     $ 358,956     $ 351,813  
    Investment securities     107,949       119,958       139,427       107,949       139,427  
    Loans, (net of deferred fees & costs)   205,219       206,975       176,307       205,219       176,307  
    Allowance for loan losses     2,839       2,748       2,157       2,839       2,157  
    Deposits     309,189       314,273       300,067       309,189       300,067  
    Borrowings     30,000       30,000       30,000       30,000       30,000  
    Stockholders’ equity     17,817       21,160       19,325       17,817       19,325  
    Net income     (39 )     129       167       (112 )     1,429  
                         
    Average Balances                    
    Assets   $ 366,888     $ 364,127     $ 353,085     $ 363,994     $ 361,731  
    Investment securities     136,868       142,972       174,581       148,037       173,902  
    Loans, (net of deferred fees & costs)   204,703       203,316       175,456       192,646       179,790  
    Deposits     314,046       312,019       310,168       309,838       330,095  
    Borrowings     30,323       30,001       26,579       32,720       12,580  
    Stockholders’ equity     20,664       19,559       14,253       19,169       17,105  
                         
    Performance Ratios                    
    Annualized return on average assets   -0.04 %     0.14 %     0.19 %     -0.03 %     0.40 %
    Annualized return on average equity   -0.75 %     2.63 %     4.65 %     -0.58 %     8.35 %
    Net interest margin     2.98 %     3.06 %     3.17 %     2.98 %     3.31 %
    Dividend payout ratio     0 %     224 %     172 %     -773 %     80 %
    Book value per share   $ 6.14     $ 7.29     $ 6.70     $ 6.14     $ 6.70  
    Basic and diluted net income per share     (0.01 )     0.04       0.06       (0.04 )     0.50  
    Cash dividends declared per share     0.00       0.10       0.10       0.30       0.40  
    Basic and diluted weighted average shares outstanding     2,900,681       2,897,929       2,880,398       2,893,871       2,873,500  
                         
    Asset Quality Ratios                    
    Allowance for loan losses to loans     1.38 %     1.33 %     1.22 %     1.38 %     1.22 %
    Nonperforming loans to avg. loans     0.18 %     0.14 %     0.30 %     0.19 %     0.29 %
    Allowance for loan losses to nonaccrual & 90+ past due loans     789.1 %     937.5 %     409.3 %     789.1 %     409.3 %
    Net charge-offs annualize to avg. loans     -0.04 %     -0.09 %     0.08 %     0.08 %     0.06 %
                         
    Capital Ratios                    
    Common Equity Tier 1 Capital     15.15 %     15.47 %     17.37 %     15.15 %     17.37 %
    Tier 1 Risk-based Capital Ratio     15.15 %     15.47 %     17.37 %     15.15 %     17.37 %
    Leverage Ratio     9.97 %     10.11 %     10.76 %     9.97 %     10.76 %
    Total Risk-Based Capital Ratio     16.40 %     16.72 %     18.40 %     16.40 %     18.40 %

    The MIL Network –

  • MIL-OSI USA: Eagles Autism Foundation Awards Research Funding to UConn School of Medicine

    Source: US State of Connecticut

    Just in time for the Super Bowl, researchers at UConn School of Medicine are part of a big win for autism research.

    UConn School of Medicine’s innovative autism research has been prestigiously awarded by the Eagles Autism Foundation to be one of its 22 cutting-edge autism research projects selected to receive a slice of $8.1 million in grant funding raised by fans.

    The grant funding was all powered by the proceeds raised by participants for the 2024 Eagles Autism Challenge and the Eagles Autism Foundation’s other annual fundraising initiatives. Impressively, since 2018, 169 autism research projects and community grants have been funded by the Foundation nationally and internationally, which is dedicated to raising funds for innovative autism research and care programs to assist those currently affected by autism, as well as future generations to make a lasting impact in the field of autism.

    Dr. Eric S. Levine.

    For the last three years, as a proud Eagles fan (and also a life-long Patriots fan) and professor of Neuroscience at UConn School of Medicine, Dr. Eric S. Levine has served on the Eagles Autism Foundation’s Advisory Board as a research expert reviewing submitted research grant proposals.

    But last year Levine decided to apply for a grant himself for his own cutting-edge UConn neuroscience research lab’s work exploring autism’s genomic genesis, and he won!

    Levine’s new award grants his lab over the next two years $400,000 in research funding to expand its laboratory investigations to identify genetic pathways that may cause autism spectrum disorders and better ways to study them.

    To start, his team has been studying two rare, genetic disease syndromes that also result in profound autism, Angelman Syndrome and Dup15q Syndrome. They impact about 1 in 5,000 children. While it still is not clear yet scientifically about autism spectrum disorders’ genetic origins, it is known that both of these autism-linked syndromes are connected to a child’s genetic differences that lead to a missing piece of a chromosome (Angelman Syndrome) or chromosomal duplication (Dup15q Syndrome) in the same 15q11-q13 region.

    Levine’s cutting-edge autism research at UConn is reprogramming the donated skin or blood cells of Angelman or Dup15q syndrome patients to develop them in the lab into brain cells that exactly mirror each patient’s genomics for further study. These green flashing neuronal cells are being analyzed by Levine’s Lab for their physical structure, intracellular calcium dynamics, and functional electrical activity (Image of Levine Lab).

    In this region, Levine has been studying the impact of the genetic deletions or duplications on the behavior and activity of neuronal brain cells. In contrast to single-gene mouse models, amazingly these studies use skin cells or blood cells obtained from patients living with either Angelman or Dup15q syndrome that are then reprogrammed and grown in the lab at UConn School of Medicine to develop into brain cells that mirror exactly each patient’s genomics.

    “This is really unique, personalized medicine, and a better way for us to study the genomics and physiology of a real child’s brain cells and the possible role multiple genes may be playing leading to autism. All kids are different. We can analyze the physical structure of their neurons, measure intracellular calcium dynamics, and record functional electrical activity,” says Levine, who has received donations of cells from families for study. “It’s very exciting to pivot our autism research to translational research studying actual patient-derived human neurons.”

    (Levine Lab image)

    In his translational research efforts, Levine hopes to compare neurons of patients and identify what role various genes play in the brain cells of the patients with syndromes also causing autism, and how their brain cells behave differently, and even test what possible current drugs or new drugs might be beneficial to patients to improve both their symptoms and quality of life.

    “There is so much to learn about the brain,” says Levine, whose work as a neuroscientist every day is driven by his fierce curiosity to learn more and more about how the brain works, and also inspired by the autism patients and families he has had the privilege to meet through the Eagles Autism Foundation over the last few years.

    “The families I have met are so grateful for our autism research efforts, and more hope is on the way. It is a very exciting time for autism research and real, tangible progress and results with research advances and drug clinical trials,” says Levine.

    “Our focus at UConn is finding the next generation of therapies,” says Levine, whose ultimate goal for his autism research is exploring the future power of gene testing and gene therapy for autism spectrum disorders and related-syndromes, including very early-on in life whether in-utero or during a young child’s life.

    “It’s challenging, but the goal is gene therapy to reduce the expression of any uncovered genetic mutations or find a way to silence these problematic genes in neurons. Finding a way to do so, would have a significant effect on autism spectrum disorder patients,” Levine says.

    (Levine Lab image).

    His research team has already shown there is a driver gene of UBE3A, which breaks down other cellular proteins in neurons, which can be either under- or overexpressed in the Angelman and Dup15q syndromes. But Levine and his team are turning their attention and focus to other genes in that same 15q11-q13 region such as GABA-A receptors and HERC2 that could also be contributing to autism spectrum disorders.

    “If we can better understand the common pathway in the brain for these two genetic syndromes that lead to autism, we may someday understand other forms of autism, especially what causes behavioral issues such as loss of verbal communication, cognitive deficits, and impaired motor-function skills,” says Levine.

    “I love being a part of this awesome Eagles Autism Foundation effort,” says Levine of UConn medical school’s Department of Neuroscience. “They are raising more and more funding for advancing autism research every year, including basic research funding. The better the Eagles team does, the more money that is raised. I am rooting for the Eagles and more winning touchdowns helping to advance our scientific insights into autism.”

    In addition to transformational research project funding like Levine’s, the proceeds are also heartwarmingly supporting community grants to organizations enhancing the lives of those affected by autism.

    “This year’s scientific review process was one of the most competitive evaluations we ever had,” says Jeffrey Lurie, chairman and CEO, Philadelphia Eagles. “The number of submissions we received in such a short period of time speaks to how much the field of autism research and care has evolved. For far too long, autism was misunderstood, underfunded, and under-researched. While there is still more work to be done, we are now seeing autism being prioritized at the highest level by some of the most recognized institutions around the world. We thank this year’s recipients for their support of the autism community and hope their groundbreaking work inspires others to follow in their footsteps.”

    The 8th annual Eagles Autism Challenge presented by Lincoln Financial will take place on Saturday, May 17, 2025. To register for the event, visit EaglesAutismChallenge.org. The Eagles Autism Foundation is offering a 50% discount on registration using promo code: LETSHUNT.

    For more information on the 2024 scientific review process and all the funded institutions, visit: EaglesAutismChallenge.org/our-impact-2024/.

    MIL OSI USA News –

  • MIL-OSI Australia: Update – Inskip crocodile sighting

    Source: Government of Queensland

    Issued: 5 Feb 2025

    Open larger image

    Wildlife officers have conducted land-based and vessel-based searches for the crocodile

    Wildlife officers will continue searching for an estimated two-metre-long crocodile in the Inskip Point area after receiving further sighting reports and video of the animal in the ocean.

    The crocodile was first observed by a ranger on the beach in front of the Sarawak camping area on 3 February 2025.

    The Department of the Environment, Tourism, Science and Innovation has since received four additional sighting reports of the crocodile in the area.

    Video taken by a camper on Monday 3 February 2025 showing the crocodile swimming close to the beach near the barge landing.

    Senior wildlife officer Joshua Morris said wildlife officers conducted land-based searches on 3 and 4 February 2025 and used a drone, but did not confirm the presence of the animal with poor weather conditions hampering their search.

    “Wildlife officers will conduct further land and water-based searches today, including an intensive vessel-based spotlight search tonight,” Mr Morris said.

    “We believe this is the same crocodile that was recently seen in the Bundaberg region on 23 January 2025.

    “We thank the people who provided the sighting reports and urge anyone who sees what they believe to be a crocodile to make a sighting report as soon as possible.

    “Fishers and people on the beach are an extra set of eyes in the search for this crocodile.

    “Rangers have installed crocodile warning signs at key locations and will continue to provide advice to people in camping areas in the Inskip Point region.

    “This crocodile has fled into the water at the sight of people and has so far avoided crowded beaches, but we still need people to be vigilant around the water.

    “Make considered choices when it comes to swimming and use a barrier such as an esky when fishing from the beach.

    “We believe the crocodile might head back north to its habitat when weather conditions improve, but if it stays in the southeast Queensland region, it will be removed from the wild.

    Crocodile sightings can be reported by using the QWildlife app, completing a crocodile sighting report on the DETSI website, or by calling 1300 130 372. The department investigates every crocodile sighting report received.

    MIL OSI News –

  • MIL-OSI Australia: Queensland rangers join Victorian bushfire battle

    Source: Government of Queensland

    Issued: 6 Feb 2025

    Open larger image

    Queensland Parks and Wildlife Service personnel, from left to right Ranger Kurt Zietlow from Cairns, Senior Ranger Brett Duke from Toowoomba, Senior Ranger Chris White from Atherton, Ranger Girresse De Simone from Springbrook, and Ranger Cooper Jenkins from Tewantin, prior to their departure to assist in fighting Victorian bushfires.

    Five fire-trained Department of the Environment, Tourism, Science and Innovation (DETSI) rangers are joining the fight against ongoing bushfires in western Victoria.

    The rangers will join other interstate firefighters in response to significant bushfires near Grampians (Gariwerd) National Park, as part of an ongoing fight to preserve nearby communities and valuable ecosystems.

    They are Senior Ranger Chris White from Atherton; Ranger Kurt Zietlow from Cairns; Ranger Girresse De Simone from Springbrook; Ranger Cooper Jenkins from Tewantin; and Senior Ranger Brett Duke from Toowoomba.

    The rangers will form part of a 20-person taskforce that includes fire personnel from other state agencies, supporting crews from Victoria who have been fighting fires in the area since late 2024.

    Due to the intense and rapidly-changing nature of bushfire response, the rangers have been put through rigorous fitness and practical testing to ensure they are equipped to face the task ahead of them.

    The rangers flew to Melbourne on 6 February 2025 before heading to the fireground near the national park.

    DETSI Deputy Director General Queensland Parks and Wildlife Service Ben Klaassen said they welcomed the opportunity to assist with the bushfire response.

    “Current weather conditions in many parts of Queensland means we have capacity to deploy a crew of our fire-trained rangers to help out our southern neighbours,” Mr Klaassen said.

    “We hope that our assistance will not only help protect nearby communities and the environmental and cultural values of Little Desert National Park and Grampians (Gaiwerd) National Park but will also give our counterparts some well-earned reprieve after a long bushfire season.

    “We wish our team all the best over the coming days and a safe return, and of course are sending our thoughts to impacted Victorian communities.”

    Senior Ranger Chris White said the deployment would be an opportunity for all involved agencies to learn from each other.

    “I’m looking forward to helping out our Victorian neighbours and gain some new perspectives,” Ranger Chris said.

    “Queensland rangers are no strangers to bushfires, but we can certainly learn a lot from the Victorian crews about how they do things on the fireground at a very large and complex incident”.

    The QPWS crews are expected to return on 12 February.

    MIL OSI News –

  • MIL-OSI: Live Ventures Reports Fiscal First Quarter 2025 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    LAS VEGAS, Feb. 06, 2025 (GLOBE NEWSWIRE) — Live Ventures Incorporated (Nasdaq: LIVE) (“Live Ventures” or the “Company”), a diversified holding company, today announced financial results for its fiscal first quarter 2025 ended December 31, 2024. 

    Fiscal First Quarter 2025 Key Highlights:

    • Revenue was $111.5 million, compared to $117.6 million in the prior year period
    • Net income was $0.5 million and diluted earnings per share (“EPS”) was $0.16, compared to the prior year period net loss of $0.7 million and loss per share of $0.22. Net income for the first quarter 2025 includes a $2.8 million gain on the settlement of the earnout liability related to the Precision Metal Works, Inc. (“PMW”) acquisition and a $0.7 million gain on the settlement of PMW seller notes
    • Adjusted EBITDA¹ was $5.7 million, compared to $8.7 million in the prior year period
    • Total assets of $395.5 million and stockholders’ equity of $73.3 million as of December 31, 2024
    • Approximately $31.1 million of cash and availability under the Company’s credit facilities as of December 31, 2024

    “Both our Retail-Entertainment and Steel Manufacturing segments delivered improved operating performance in the first quarter, with increases in operating income and operating margins as compared to the prior year period. However, high interest rates and a slowdown in the housing market continued to impact our Retail-Flooring and Flooring Manufacturing segments, as reduced consumer demand weighed on performance,” commented David Verret, Chief Financial Officer of Live Ventures.

    “We are pleased with the operating improvements achieved in our Retail-Entertainment and Steel Manufacturing segments during the first quarter. That said, industry-specific headwinds are impacting our Retail-Flooring and Flooring Manufacturing segments. To address this, we are implementing additional measures to enhance the efficiency of our flooring businesses,” stated Jon Isaac, President and Chief Executive Officer of Live Ventures. “Despite these challenges, we remain confident in the long-term strength of our businesses.”

    First Quarter FY 2025 Financial Summary (in thousands except per share amounts)
      For the three months ended December 31,
        2024     2023     % Change
    Revenue $ 111,508   $ 117,593     -5.2 %
    Operating income $ 762   $ 3,541     -78.5 %
    Net income (loss) $ 492   $ (682 )   172.1 %
    Diluted earnings (loss) per share $ 0.16   $ (0.22 )   172.7 %
    Adjusted EBITDA¹ $ 5,744   $ 8,696     -33.9 %
                       

    Revenue decreased approximately $6.1 million, or 5.2%, to approximately $111.5 million for the quarter ended December 31, 2024, compared to revenue of approximately $117.6 million in the prior year period. The decrease is attributable to the Flooring Manufacturing, Retail-Flooring, and Steel Manufacturing segments, which decreased by approximately $6.7 million in the aggregate.

    Operating income was approximately $0.8 million for the quarter ended December 31, 2024, compared with operating income of approximately $3.5 million in the prior year period. The decrease in operating income is primarily attributable to the decrease in revenue and increased general and administrative expenses in the Retail-Flooring segment. The decrease in operating income was partially offset by increased operating income in the Retail-Entertainment and Steel Manufacturing segments.

    For the quarter ended December 31, 2024, net income was approximately $0.5 million, and diluted EPS was $0.16, compared with net loss of approximately $0.7 million and loss per share of $0.22 in the prior year period. The increase in net income is primarily attributable to a $2.8 million gain on the settlement of the earnout liability related to the PMW acquisition and a $0.7 million gain on the settlement of PMW seller notes.

    Adjusted EBITDA¹ for the quarter ended December 31, 2024 was approximately $5.7 million, a decrease of approximately $3.0 million, or 33.9%, compared to the prior year period. The decrease in adjusted EBITDA is primarily due to an overall decrease in operating income.

    As of December 31, 2024, the Company had total cash availability of $31.1 million, consisting of cash on hand of $7.4 million and availability under its various lines of credit of $23.7 million.

    First Quarter FY 2025 Segment Results (in thousands)

      For the three months ended December 31,
        2024       2023     % Change
    Revenue          
    Retail – Entertainment $ 21,273     $ 20,586     3.3 %
    Retail – Flooring   31,747       34,319     -7.5 %
    Flooring Manufacturing   25,996       29,245     -11.1 %
    Steel Manufacturing   32,435       33,354     -2.8 %
    Corporate & Other   57       89     -36.0 %
    Total Revenue $ 111,508     $ 117,593     -5.2 %
               
      For the three months ended December 31,
        2024       2023     % Change
    Operating Income (loss)          
    Retail – Entertainment $ 3,408     $ 3,143     8.4 %
    Retail – Flooring   (2,174 )     90     N/A
    Flooring Manufacturing   (81 )     945     -108.6 %
    Steel Manufacturing   1,166       982     18.7 %
    Corporate & Other   (1,557 )     (1,619 )   3.8 %
    Total Operating Income $ 762     $ 3,541     -78.5 %
               
      For the three months ended December 31,
        2024       2023     % Change
    Adjusted EBITDA¹          
    Retail – Entertainment $ 3,810     $ 3,667     3.9 %
    Retail – Flooring   (971 )   $ 1,303     -174.5 %
    Flooring Manufacturing   750       1,877     -60.0 %
    Steel Manufacturing   2,801       2,802     0.0 %
    Corporate & Other   (646 )     (953 )   32.2 %
    Total Adjusted EBITDA¹ $ 5,744     $ 8,696     -33.9 %
               
    Adjusted EBITDA¹ as a percentage of revenue        
    Retail – Entertainment   17.9 %     17.8 %    
    Retail – Flooring   -3.1 %     3.8 %    
    Flooring Manufacturing   2.9 %     6.4 %    
    Steel Manufacturing   8.6 %     8.4 %    
    Corporate & Other N/A   N/A    
    Total Adjusted EBITDA¹   5.2 %     7.4 %    
    as a percentage of revenue          
               

    Retail – Entertainment

    Retail-Entertainment segment revenue for the quarter ended December 31, 2024 was approximately $21.3 million, an increase of approximately $0.7 million, or 3.3%, compared to prior year period revenue of approximately $20.6 million. Revenue increased primarily due to increased consumer demand for used products. The increase in used products contributed to the increase in gross margin to 56.6% for the quarter ended December 31, 2024, compared to 56.0% for the prior year period. Operating income for the quarter ended December 31, 2024 was approximately $3.4 million, compared to operating income of approximately $3.1 million for the prior year period.

    Retail – Flooring

    The Retail-Flooring segment revenue for the quarter ended December 31, 2024, was approximately $31.7 million, a decrease of approximately $2.6 million, or 7.5%, compared to the prior year period revenue of approximately $34.3 million. The decrease was primarily due to reduced demand. Gross margin for the quarter ended December 31, 2024 was 37.2%, compared to 38.0% for the prior year period. The decrease in gross margin was primarily driven by a change in product mix. Operating loss for the quarter ended December 31, 2024 was approximately $2.2 million, compared to operating income of approximately $0.1 million for the prior year period. The increase in operating loss was primarily due to additional wages and other general and administrative costs during the quarter ended December 31, 2024.

    Flooring Manufacturing

    Revenue for the quarter ended December 31, 2024 was approximately $26.0 million, a decrease of approximately $3.2 million, or 11.1%, compared to prior year period revenue of approximately $29.2 million. The decrease in revenue was primarily due to reduced consumer demand. Gross margin was 21.2% for the quarter ended December 31, 2024, compared to 22.0% for the prior year period. The decrease in gross margin was primarily due to changes in product mix. Operating loss for the quarter ended December 31, 2024 was approximately $0.1 million, compared to operating income of approximately $0.9 million for the prior year period.

    Steel Manufacturing

    Revenue for the quarter ended December 31, 2024 was approximately $32.4 million, a decrease of approximately $0.9 million or 2.8%, compared to prior year period revenue of approximately $33.4 million. The decrease was primarily due to reduced customer demand, partially offset by incremental revenue of $3.1 million at Central Steel Fabricators, LLC (“Central Steel”), which was acquired in May 2024. Gross margin was 18.3% for the quarter ended December 31, 2024, compared to 15.8% for the prior year period. The increase in gross margin was primarily due to strategic price increases, as well as the acquisition of Central Steel. Operating income for the quarter ended December 31, 2024 was approximately $1.2 million, compared to operating income of approximately $1.0 million in the prior year period.

    Corporate and Other

    Revenue for the quarter ended December 31, 2024 was approximately $57,000, a decrease of approximately $32,000, or 36.0%, compared to prior year period revenue of approximately $89,000. Operating loss for the quarters ended December 31, 2024 and 2023 were approximately $1.6 million.

    Non-GAAP Financial Information

    Adjusted EBITDA

    We evaluate the performance of our operations based on financial measures, such as “Adjusted EBITDA,” which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization, stock-based compensation, and other non-cash or nonrecurring charges. We believe that Adjusted EBITDA is an important indicator of the operational strength and performance of the business, including the business’s ability to fund acquisitions and other capital expenditures and to service its debt. Additionally, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to improve performance. Adjusted EBITDA is also a measure that is customarily used by financial analysts to evaluate a company’s financial performance, subject to certain adjustments. Adjusted EBITDA does not represent cash flows from operations, as defined by generally accepted accounting principles (“GAAP”), should not be construed as an alternative to net income or loss, and is indicative neither of our results of operations, nor of cash flow available to fund our cash needs. It is, however, a measurement that the Company believes is useful to investors in analyzing its operating performance. Accordingly, Adjusted EBITDA should be considered in addition to, but not as a substitute for, net income, cash flow provided by operating activities, and other measures of financial performance prepared in accordance with GAAP. As companies often define non-GAAP financial measures differently, Adjusted EBITDA, as calculated by Live Ventures Incorporated, should not be compared to any similarly titled measures reported by other companies.

    Forward-Looking and Cautionary Statements

    The use of the word “Company” refers to Live Ventures and its wholly owned subsidiaries. Certain statements in this press release contain or may suggest “forward-looking” information within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, each as amended, that are intended to be covered by the “safe harbor” created by those sections. Words such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar statements are intended to identify forward-looking statements. Live Ventures may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 10-K and 10-Q, Current Reports on Form 8-K, in its annual report to stockholders, in press releases and other written materials, and in oral statements made by its officers, directors or employees to third parties. There can be no assurance that such statements will prove to be accurate and there are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by the Company, including, but not limited to, plans and objectives of management for future operations or products, the market acceptance or future success of our products, and our future financial performance. The Company cautions that these forward-looking statements are further qualified by other factors including, but not limited to, those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024. Additionally, new risk factors emerge from time to time, and it is not possible for us to predict all such risk factors, or to assess the impact such risk factors might have on our business. Live Ventures undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

    About Live Ventures Incorporated

    Live Ventures is a diversified holding company with a strategic focus on value-oriented acquisitions of domestic middle-market companies. Live Ventures’ acquisition strategy is sector-agnostic and focuses on well-run, closely held businesses with a demonstrated track record of earnings growth and cash flow generation. The Company looks for opportunities to partner with management teams of its acquired businesses to build increased stockholder value through a disciplined buy-build-hold long-term focused strategy. Live Ventures was founded in 1968. In late 2011, Jon Isaac, Chief Executive Officer and strategic investor, joined the Company’s Board of Directors and later refocused it into a diversified holding company. The Company’s current portfolio of diversified operating subsidiaries includes companies in the textile, flooring, tools, steel, and entertainment industries.

    Contact:
    Live Ventures Incorporated
    Greg Powell, Director of Investor Relations
    725.500.5597
    gpowell@liveventures.com 
    www.liveventures.com 

    Source: Live Ventures Incorporated

    CONSOLIDATED BALANCE SHEETS
    (UNAUDITED)
    (dollars in thousands, except per share amounts)

      December 31, 2024   September 30, 2024
      (Unaudited)    
    Assets      
    Cash $ 7,407     $ 4,601  
    Trade receivables, net of allowance for doubtful accounts of $1.4 million at December 31, 2024 and $1.5 million at September 30, 2024   38,040       46,861  
    Inventories, net   123,389       126,350  
    Prepaid expenses and other current assets   3,594       4,123  
    Total current assets   172,430       181,935  
    Property and equipment, net   81,527       82,869  
    Right of use asset – operating leases   55,113       55,701  
    Deposits and other assets   1,455       787  
    Intangible assets, net   23,847       25,103  
    Goodwill   61,152       61,152  
    Total assets $ 395,524     $ 407,547  
    Liabilities and Stockholders’ Equity      
    Liabilities:      
    Accounts payable $ 28,478     $ 31,002  
    Accrued liabilities   30,548       31,740  
    Income taxes payable   1,483       948  
    Current portion of lease obligations – operating leases   13,219       12,885  
    Current portion of lease obligations – finance leases   467       368  
    Current portion of long-term debt   39,595       43,816  
    Current portion of notes payable related parties   7,670       6,400  
    Seller notes – related parties   —       2,500  
    Total current liabilities   121,460       129,659  
    Long-term debt, net of current portion   54,339       54,994  
    Lease obligation long term – operating leases   46,566       50,111  
    Lease obligation long term – finance leases   42,200       41,677  
    Notes payable related parties, net of current portion   6,871       4,934  
    Seller notes – related parties   41,119       40,361  
    Deferred tax liability, net   5,812       6,267  
    Other non-current obligations   3,882       6,655  
    Total liabilities   322,249       334,658  
    Commitments and contingencies      
    Stockholders’ equity:      
    Series E convertible preferred stock, $0.001 par value, 200,000 shares authorized, 47,840 shares issued and outstanding at December 31, 2024 and September 30, 2024, with a liquidation preference of $0.30 per share outstanding   —       —  
    Common stock, $0.001 par value, 10,000,000 shares authorized, 3,115,674 and 3,131,360 shares issued and outstanding at December 31, 2024 and September 30, 2024, respectively   2       2  
    Paid in capital   69,743       69,692  
    Treasury stock common 710,373 and 694,687 shares as of December 31, 2024 and September 30, 2024, respectively   (9,229 )     (9,072 )
    Treasury stock Series E preferred 80,000 shares as of December 31, 2024 and September 30, 2024   (7 )     (7 )
    Retained earnings   12,766       12,274  
      Total stockholders’ equity   73,275       72,889  
        Total liabilities and stockholders’ equity $ 395,524     $ 407,547  
                   

    LIVE VENTURES, INCORPORATED
    CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
    (dollars in thousands, except per share)

      For the Three Months Ended December 31,
        2024       2023  
    Revenue $ 111,508     $ 117,593  
    Cost of revenue   76,146       81,266  
    Gross profit   35,362       36,327  
           
    Operating expenses:      
    General and administrative expenses   30,071       27,679  
    Sales and marketing expenses   4,529       5,107  
    Total operating expenses   34,600       32,786  
    Operating income   762       3,541  
    Other expense:      
    Interest expense, net   (4,162 )     (4,163 )
    Gain on settlement of seller notes   713       —  
    Gain on settlement of earnout liability   2,840       —  
    Other income (expense)   420       (284 )
    Total other expense, net   (189 )     (4,447 )
    Income (loss) before provision for income taxes   573       (906 )
    Provision (benefit) for income taxes   81       (224 )
    Net Income (loss) $ 492     $ (682 )
           
    Income (loss) per share:      
    Basic and diluted $ 0.16     $ (0.22 )
           
    Weighted average common shares outstanding:      
    Basic   3,124,581       3,163,541  
    Diluted   3,124,820       3,163,541  
                   

    LIVE VENTURES INCORPORATED
    NON-GAAP MEASURES RECONCILIATION

    Adjusted EBITDA

    The following table provides a reconciliation of Net (loss) income to total Adjusted EBITDA¹ for the periods indicated (dollars in thousands):

      For the Three Months Ended
      December 31, 2024   December 31, 2023
    Net income (loss) $ 492     $ (682 )
    Depreciation and amortization   4,415       4,295  
    Stock-based compensation   50       50  
    Interest expense, net   4,162       4,163  
    Income tax expense (benefit)   81       (224 )
    Debt refinancing costs   —       183  
    Gain on extinguishment of debt   (713 )     —  
    Gain on write-off of earnout   (2,840 )     —  
    Acquisition costs   97       406  
    Adjusted EBITDA $ 5,744     $ 8,696  

    The MIL Network –

  • MIL-OSI: AMG Reports Financial and Operating Results for the Fourth Quarter and Full Year 2024

    Source: GlobeNewswire (MIL-OSI)

    Company reports EPS of $4.92, Economic EPS of $6.53 in the fourth quarter of 2024
    EPS of $15.13, Economic EPS of $21.36 for the full year 2024

    • New partnership with NorthBridge Partners, a private markets manager specializing in industrial logistics real estate assets
    • Net income (controlling interest) of $512 million, Economic Net Income (controlling interest) of $702 million
    • 10% full-year Economic Earnings per share growth reflects AMG’s ongoing strategic evolution and disciplined capital allocation strategy
    • Repurchased $700 million in common stock or approximately 13% of shares outstanding in 2024

    WEST PALM BEACH, Fla., Feb. 06, 2025 (GLOBE NEWSWIRE) — AMG, a strategic partner to leading independent investment management firms globally, today reported its financial and operating results for the fourth quarter and year ended December 31, 2024.

    Jay C. Horgen, President and Chief Executive Officer of AMG, said:
    “AMG delivered record Economic Earnings per share in 2024; growth of 10% relative to the prior year reflected the ongoing evolution of our business and the positive impact of our disciplined capital allocation strategy.

    “In 2024, we continued to strategically evolve our business, increasing our exposure to alternatives, which further enhances our long-term growth prospects. AMG’s private markets Affiliates raised approximately $24 billion during the year, reflecting the ongoing demand for our Affiliates’ specialized strategies. Throughout the year we continued to invest our capital and resources alongside our Affiliates to develop new products for the U.S. wealth marketplace, including additional innovative alternative solutions across private markets and liquid alternatives.

    “This morning, we announced our investment in NorthBridge Partners, a leading vertically integrated real estate manager with excellent forward prospects, given its deep expertise and targeted investment strategy in last-mile logistics, a high-growth sector benefiting from the expanding digital economy and evolving supply chain dynamics. Our partnership with NorthBridge broadens AMG’s participation in private markets and underscores our focus on investing in areas of secular growth. AMG’s proven ability to magnify the competitive advantages of partner-owned firms, while also preserving their independence, continues to differentiate AMG’s partnership model and is highly valued by prospective Affiliates.

    “Our execution across each element of our growth strategy, including investing in new Affiliate partnerships, investing in our existing Affiliates, and investing in AMG’s capabilities to magnify our Affiliates’ success, is driving the evolution of our distinctive business profile. Given AMG’s proven strategic capabilities and 30-year track record of successful partnerships, our opportunities to invest in growth are expanding. With our ample financial flexibility and disciplined capital allocation framework, we enter 2025 in an excellent position to continue executing on our strategy, and create meaningful incremental shareholder value over time.”

    FINANCIAL HIGHLIGHTS Three Months Ended   Years Ended
    (in millions, except as noted and per share data) 12/31/2023   12/31/2024   12/31/2023   12/31/2024
    Operating Performance Measures              
    AUM (at period end, in billions) $ 672.7     $ 707.9     $ 672.7     $ 707.9  
    Average AUM (in billions)   648.1       717.3       660.3       700.5  
    Net client cash flows (in billions)   (6.1 )     (8.3 )     (29.2 )     (13.9 )
    Aggregate fees   1,560.9       1,509.2       5,066.6       5,236.0  
    Financial Performance Measures              
    Net income (controlling interest) $ 196.2     $ 162.1     $ 672.9     $ 511.6  
    Earnings per share (diluted)(1)   5.15       4.92       17.42       15.13  
    Supplemental Performance Measures(2)              
    Adjusted EBITDA (controlling interest) $ 296.2     $ 281.7     $ 935.7     $ 973.1  
    Economic net income (controlling interest)   242.9       205.8       717.8       701.6  
    Economic earnings per share   6.86       6.53       19.48       21.36  
                                   

    For additional information on our Supplemental Performance Measures, including reconciliations to GAAP, see the Financial Tables and Notes.

    Capital Management
    During the fourth quarter of 2024, the Company repurchased approximately $120 million in common stock, bringing full-year share repurchases to approximately $700 million. The Company also announced a fourth-quarter cash dividend of $0.01 per share of common stock, payable March 4, 2025 to stockholders of record as of the close of business on February 18, 2025.

    About AMG
    AMG (NYSE: AMG) is a strategic partner to leading independent investment management firms globally. AMG’s strategy is to generate long‐term value by investing in high-quality independent partner-owned firms, through a proven partnership approach, and allocating resources across AMG’s unique opportunity set to the areas of highest growth and return. Through its distinctive approach, AMG magnifies its Affiliates’ existing advantages and actively supports their independence and ownership culture. As of December 31, 2024, AMG’s aggregate assets under management were approximately $708 billion across a diverse range of private markets, liquid alternative, and differentiated long-only investment strategies. For more information, please visit the Company’s website at www.amg.com.

             

    Conference Call, Replay and Presentation Information
    A conference call will be held with AMG’s management at 8:30 a.m. Eastern time today. Parties interested in listening to the conference call should dial 1-877-407-8291 (U.S. calls) or 1-201-689-8345 (non-U.S. calls) shortly before the call begins.

    The conference call will also be available for replay beginning approximately one hour after the conclusion of the call. To hear a replay of the call, please dial 1-877-660-6853 (U.S. calls) or 1-201-612-7415 (non-U.S. calls) and provide conference ID 13750674. The live call and replay of the session and a presentation highlighting the Company’s performance can also be accessed via AMG’s website at https://ir.amg.com/.

    Financial Tables Follow

    ASSETS UNDER MANAGEMENT – STATEMENTS OF CHANGES (in billions)
     
      Alternatives   Differentiated Long-Only  
    BY STRATEGY – QUARTER TO DATE Private Markets
    		   Liquid
    Alternatives
    		     Equities
    		   Multi-Asset &
    Fixed Income
    		   Total
    		  
    AUM, September 30, 2024 $ 131.2   $ 135.3     $ 345.9   $ 116.0   $ 728.4  
    Client cash inflows and commitments   5.6     8.9       10.2     5.2     29.9  
    Client cash outflows   (0.1 )   (7.3 )     (25.8 )   (5.0 )   (38.2 )
    Net client cash flows   5.5     1.6       (15.6 )   0.2     (8.3 )
    Market changes   (0.2 )   3.5       (2.5 )   0.4     1.2  
    Foreign exchange   (0.5 )   (3.1 )     (6.3 )   (1.3 )   (11.2 )
    Realizations and distributions (net)   (0.7 )   (0.2 )     (1.3 )   (0.1 )   (2.3 )
    Other   0.1     3.6       (4.0 )   0.4     0.1  
    AUM, December 31, 2024 $ 135.4   $ 140.7     $ 316.2   $ 115.6   $ 707.9  
      Alternatives   Differentiated Long-Only  
    BY STRATEGY – YEAR TO DATE Private Markets
    		   Liquid
    Alternatives
    		     Equities
    		   Multi-Asset &
    Fixed Income
    		   Total
    		  
    AUM, December 31, 2023 $ 114.8   $ 124.0     $ 329.4   $ 104.5   $ 672.7  
    Client cash inflows and commitments   23.7     27.5       38.1     22.1     111.4  
    Client cash outflows   (0.2 )   (25.6 )     (80.2 )   (19.3 )   (125.3 )
    Net client cash flows   23.5     1.9       (42.1 )   2.8     (13.9 )
    New investments   0.7     —       —     0.7     1.4  
    Market changes   0.4     10.6       41.4     8.7     61.1  
    Foreign exchange   (0.3 )   (0.8 )     (4.6 )   (1.2 )   (6.9 )
    Realizations and distributions (net)   (4.4 )   (0.5 )     (1.4 )   (0.3 )   (6.6 )
    Other   0.7     5.5       (6.5 )   0.4     0.1  
    AUM, December 31, 2024 $ 135.4   $ 140.7     $ 316.2   $ 115.6   $ 707.9  
     
    CONSOLIDATED STATEMENTS OF INCOME
     
        Three Months Ended
    (in millions, except per share data)   12/31/2023   12/31/2024
    Consolidated revenue   $ 502.7     $ 524.2  
             
    Consolidated expenses:        
    Compensation and related expenses     244.5       238.8  
    Selling, general and administrative     84.8       98.4  
    Intangible amortization and impairments     10.8       7.3  
    Interest expense     31.4       35.2  
    Depreciation and other amortization     3.0       4.0  
    Other expenses (net)     9.6       8.8  
    Total consolidated expenses     384.1       392.5  
             
    Equity method income (net)(3)     125.7       124.5  
    Affiliate Transaction gains(4)     —       —  
    Investment and other income     29.8       17.5  
    Income before income taxes     274.1       273.7  
             
    Income tax expense     29.8       52.6  
    Net income     244.3       221.1  
             
    Net income (non-controlling interests)     (48.1 )     (59.0 )
    Net income (controlling interest)   $ 196.2     $ 162.1  
             
    Average shares outstanding (basic)     33.7       30.1  
    Average shares outstanding (diluted)     41.3       36.0  
             
    Earnings per share (basic)   $ 5.83     $ 5.39  
    Earnings per share (diluted)(1)   $ 5.15     $ 4.92  
     
    RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE MEASURES(2)
     
        Three Months Ended
    (in millions, except per share data)   12/31/2023   12/31/2024
    Net income (controlling interest)   $ 196.2     $ 162.1  
    Intangible amortization and impairments     39.9       30.5  
    Intangible-related deferred taxes     12.8       15.3  
    Affiliate Transactions(4)     —       —  
    Other economic items     (6.0 )     (2.1 )
    Economic net income (controlling interest)   $ 242.9     $ 205.8  
             
    Average shares outstanding (adjusted diluted)     35.4       31.5  
    Economic earnings per share   $ 6.86     $ 6.53  
             
    Net income (controlling interest)   $ 196.2     $ 162.1  
    Interest expense     31.4       35.2  
    Income taxes     34.5       54.9  
    Intangible amortization and impairments     39.9       30.5  
    Affiliate Transactions(4)     —       —  
    Other items     (5.8 )     (1.0 )
    Adjusted EBITDA (controlling interest)   $ 296.2     $ 281.7  
     
    See Notes for additional information.
    CONSOLIDATED STATEMENTS OF INCOME
     
        Years Ended
    (in millions, except per share data)   12/31/2023   12/31/2024
    Consolidated revenue   $ 2,057.8     $ 2,040.9  
             
    Consolidated expenses:        
    Compensation and related expenses     907.5       915.3  
    Selling, general and administrative     358.2       376.5  
    Intangible amortization and impairments     48.3       29.0  
    Interest expense     123.8       133.3  
    Depreciation and other amortization     13.0       13.4  
    Other expenses (net)     45.8       40.3  
    Total consolidated expenses     1,496.6       1,507.8  
             
    Equity method income (net)(3)     280.0       312.7  
    Affiliate Transaction gains(4)     133.1       —  
    Investment and other income     117.1       77.4  
    Income before income taxes     1,091.4       923.2  
             
    Income tax expense     185.3       182.6  
    Net income     906.1       740.6  
             
    Net income (non-controlling interests)     (233.2 )     (229.0 )
    Net income (controlling interest)   $ 672.9     $ 511.6  
             
    Average shares outstanding (basic)     35.1       31.1  
    Average shares outstanding (diluted)     42.2       36.1  
             
    Earnings per share (basic)   $ 19.18     $ 16.45  
    Earnings per share (diluted)(1)   $ 17.42     $ 15.13  
     
    RECONCILIATIONS OF SUPPLEMENTAL PERFORMANCE MEASURES(2)
     
        Years Ended
    (in millions, except per share data)   12/31/2023   12/31/2024
    Net income (controlling interest)   $ 672.9     $ 511.6  
    Intangible amortization and impairments     128.5       149.2  
    Intangible-related deferred taxes     57.3       61.9  
    Affiliate Transactions(4)     (122.1 )     —  
    Other economic items     (18.8 )     (21.1 )
    Economic net income (controlling interest)   $ 717.8     $ 701.6  
             
    Average shares outstanding (adjusted diluted)     36.8       32.8  
    Economic earnings per share   $ 19.48     $ 21.36  
             
    Net income (controlling interest)   $ 672.9     $ 511.6  
    Interest expense     123.8       133.3  
    Income taxes     185.2       187.9  
    Intangible amortization and impairments     128.5       149.2  
    Affiliate Transactions(4)     (162.7 )     —  
    Other items     (12.0 )     (8.9 )
    Adjusted EBITDA (controlling interest)   $ 935.7     $ 973.1  
     
    See Notes for additional information.
    CONSOLIDATED BALANCE SHEETS
     
        Years Ended
    (in millions)   12/31/2023   12/31/2024
    Assets        
    Cash and cash equivalents   $ 813.6     $ 950.0  
    Receivables     368.4       409.7  
    Investments     941.9       595.6  
    Goodwill     2,523.6       2,504.9  
    Acquired client relationships (net)     1,812.4       1,777.8  
    Equity method investments in Affiliates (net)     2,288.5       2,246.6  
    Fixed assets (net)     67.3       57.6  
    Other assets     243.9       288.7  
    Total assets   $ 9,059.6     $ 8,830.9  
             
    Liabilities and Equity        
    Payables and accrued liabilities   $ 628.5     $ 639.1  
    Debt     2,537.5       2,620.2  
    Deferred tax liability (net)     463.8       520.5  
    Other liabilities     466.3       402.4  
    Total liabilities     4,096.1       4,182.2  
             
    Redeemable non-controlling interests     393.4       350.5  
    Equity:        
    Common stock     0.6       0.6  
    Additional paid-in capital     741.4       733.1  
    Accumulated other comprehensive loss     (167.6 )     (163.6 )
    Retained earnings     6,389.6       6,899.8  
          6,964.0       7,469.9  
    Less: treasury stock, at cost     (3,376.1 )     (4,124.6 )
    Total stockholders’ equity     3,587.9       3,345.3  
    Non-controlling interests     982.2       952.9  
    Total equity     4,570.1       4,298.2  
    Total liabilities and equity   $ 9,059.6     $ 8,830.9  
    Notes
       
    (1) Earnings per share (diluted) adjusts for the dilutive effect of the potential issuance of incremental shares of our common stock.
       
      We assume the settlement of all of our Redeemable non-controlling interests using the maximum number of shares permitted under our arrangements. The issuance of shares and the related income acquired are excluded from the calculation if an assumed purchase of Redeemable non-controlling interests would be anti-dilutive to diluted earnings per share.
       
      We are required to apply the if-converted method to our outstanding junior convertible securities when calculating Earnings per share (diluted). Under the if-converted method, shares that are issuable upon conversion are deemed outstanding, regardless of whether the securities are contractually convertible into our common stock at that time. For this calculation, the interest expense (net of tax) attributable to these dilutive securities is added back to Net income (controlling interest), reflecting the assumption that the securities have been converted. Issuable shares for these securities and related interest expense are excluded from the calculation if an assumed conversion would be anti-dilutive to diluted earnings per share.
       
      The following table provides a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per share:
          Three Months Ended   Years Ended
      (in millions)   12/31/2023   12/31/2024   12/31/2023   12/31/2024
      Numerator                
      Net income (controlling interest)   $ 196.2   $ 162.1   $ 672.9   $ 511.6
      Income from hypothetical settlement of Redeemable non-controlling interests, net of taxes     12.9     11.7     49.0     20.5
      Interest expense on junior convertible securities, net of taxes     3.4     3.4     13.4     13.4
      Net income (controlling interest), as adjusted   $ 212.5   $ 177.2   $ 735.3   $ 545.5
      Denominator                
      Average shares outstanding (basic)     33.7     30.1     35.1     31.1
      Effect of dilutive instruments:                
      Stock options and restricted stock units     1.7     1.4     1.7     1.7
      Hypothetical issuance of shares to settle Redeemable non-controlling interests     4.2     2.8     3.7     1.6
      Junior convertible securities     1.7     1.7     1.7     1.7
      Average shares outstanding (diluted)     41.3     36.0     42.2     36.1
    (2) As supplemental information, we provide non-GAAP performance measures of Adjusted EBITDA (controlling interest), Economic net income (controlling interest), and Economic earnings per share. We believe that many investors use our Adjusted EBITDA (controlling interest) when comparing our financial performance to other companies in the investment management industry. Management utilizes these non-GAAP performance measures to assess our performance before our share of certain non-cash GAAP expenses primarily related to the acquisition of interests in Affiliates and to improve comparability between periods. Economic net income (controlling interest) and Economic earnings per share are used by management and our Board of Directors as our principal performance benchmarks, including as one of the measures for determining executive compensation. These non-GAAP performance measures are provided in addition to, but not as a substitute for, Net income (controlling interest), Earnings per share, or other GAAP performance measures. For additional information on our non-GAAP measures, see our most recent Annual and Quarterly Reports on Form 10-K and 10-Q, respectively, which are accessible on the SEC’s website at www.sec.gov.
       
      Adjusted EBITDA (controlling interest) represents our performance before our share of interest expense, income and certain non-income based taxes, depreciation, amortization, impairments, gains and losses related to Affiliate Transactions, and non-cash items such as certain Affiliate equity activity, gains and losses on our contingent payment obligations, and unrealized gains and losses on seed capital, general partner commitments, and other strategic investments. Adjusted EBITDA (controlling interest) is also adjusted to include realized economic gains and losses related to these seed capital, general partner commitments, and other strategic investments.
       
      Under our Economic net income (controlling interest) definition, we adjust Net income (controlling interest) for our share of pre-tax intangible amortization and impairments related to intangible assets (including the portion attributable to equity method investments in Affiliates) because these expenses do not correspond to the changes in the value of these assets, which do not diminish predictably over time. We also adjust for deferred taxes attributable to intangible assets because we believe it is unlikely these accruals will be used to settle material tax obligations. Further, we adjust for gains and losses related to Affiliate Transactions, net of tax, and other economic items. Other economic items include certain Affiliate equity activity, gains and losses related to contingent payment obligations, tax windfalls and shortfalls from share-based compensation, unrealized gains and losses on seed capital, general partner commitments, and other strategic investments, and realized economic gains and losses related to these seed capital, general partner commitments, and other strategic investments.
       
      Economic earnings per share represents Economic net income (controlling interest) divided by the Average shares outstanding (adjusted diluted). In this calculation, we exclude the potential shares issued upon settlement of Redeemable non-controlling interests from Average shares outstanding (adjusted diluted) because we intend to settle those obligations without issuing shares, consistent with all prior Affiliate equity purchase transactions. The potential share issuance in connection with our junior convertible securities is measured using a “treasury stock” method. Under this method, only the net number of shares of common stock equal to the value of the junior convertible securities in excess of par, if any, are deemed to be outstanding. We believe the inclusion of net shares under a treasury stock method best reflects the benefit of the increase in available capital resources (which could be used to repurchase shares of our common stock) that occurs when these securities are converted and we are relieved of our debt obligation.
       
      The following table provides a reconciliation of Average shares outstanding (adjusted diluted):
          Three Months Ended   Years Ended
      (in millions)   12/31/2023     12/31/2024     12/31/2023     12/31/2024  
      Average shares outstanding (diluted)   41.3     36.0     42.2     36.1  
      Hypothetical issuance of shares to settle Redeemable non-controlling interests   (4.2 )   (2.8 )   (3.7 )   (1.6 )
      Junior convertible securities   (1.7 )   (1.7 )   (1.7 )   (1.7 )
      Average shares outstanding (adjusted diluted)   35.4     31.5     36.8     32.8  
    (3) The following table presents equity method earnings and equity method intangible amortization and impairments, which in aggregate form Equity method income (net):
       
          Three Months Ended   Years Ended
      (in millions)   12/31/2023   12/31/2024   12/31/2023   12/31/2024
      Equity method earnings   $ 158.3     $ 150.1     $ 375.6     $ 442.7  
      Equity method intangible amortization and impairments     (32.6 )     (25.6 )     (95.6 )     (130.0 )
      Equity method income (net)   $ 125.7     $ 124.5     $ 280.0     $ 312.7  
    (4) The following table presents the impact of the completion of our previously announced sales of our equity interests in Veritable, LP to a third party in the third quarter of 2023, and Baring Private Equity Asia to EQT AB (“EQT”), a public company listed on Nasdaq Stockholm (EQT ST), in the fourth quarter of 2022, pursuant to which we received ordinary shares of EQT:
     
          Three Months Ended   Years Ended
      (in millions)   12/31/2023   12/31/2024   12/31/2023   12/31/2024  
      Affiliate Transaction gain   $ —     $ —     $ 133.1     $ —  
      Investment and other income – Realized gains on EQT shares     —       —       29.6       —  
      Affiliate Transactions, pre-tax     —       —       162.7       —  
      Income taxes     —       —       (40.6 )     —  
      Affiliate Transactions, after-tax   $ —     $ —     $ 122.1     $ —  
     

    Forward-Looking Statements and Other Matters

    Certain matters discussed in this press release issued by Affiliated Managers Group, Inc. (“AMG” or the “Company”) may constitute forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,” “guidance,” “believes,” “expects,” “potential,” “preliminary,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “projects,” “positioned,” “prospects,” “intends,” “plans,” “estimates,” “pending investments,” “anticipates,” or the negative version of these words or other comparable words. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including changes in the securities or financial markets or in general economic conditions, the availability of equity and debt financing, competition for acquisitions of interests in investment management firms, uncertainties relating to closing of pending investments or transactions and potential changes in the anticipated benefits thereof, the investment performance and growth rates of our Affiliates and their ability to effectively market their investment strategies, the mix of Affiliate contributions to our earnings, and other risks, uncertainties, and assumptions, including those described under the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors may be updated from time to time in our periodic filings with the SEC. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments, or otherwise, except as required by applicable law.

    This release does not constitute an offer of any products, investment vehicles, or services of any AMG Affiliate.

    From time to time, AMG may use its website as a distribution channel of material Company information. AMG routinely posts financial and other important information regarding the Company in the Investor Relations section of its website at www.amg.com and encourages investors to consult that section regularly.

    Investor and Media Relations
    Patricia Figueroa
    +1 (617) 747-3300
    ir@amg.com
    pr@amg.com

    The MIL Network –

  • MIL-OSI: Societe Generale: Fourth quarter & 2024 full year results

    Source: GlobeNewswire (MIL-OSI)

    RESULTS AT 31 DECEMBER 2024

    Press release                                                        
    Paris, 6 February 2025

    2024 RESULTS ABOVE ALL GROUP TARGETS
    GROUP NET INCOME OF EUR 4.2 BILLION, +69% vs. 2023

    Annual revenues of EUR 26.8 billion, up by +6.7% vs. 2023, above the ≥+5% target set for 2024, driven in particular by the strong rebound in net interest income in France and by an excellent performance in Global Banking and Investor Solutions with revenues above EUR 10 billion

    Cost-to-income ratio of 69.0%, below the target of <71% set for 2024, thanks to tight control of costs, which are stable vs. 2023

    Cost of risk at 26 basis points, at the lower end of the 2024 guidance range

    Profitability (ROTE) of 6.9%, above the target of >6% expected for 2024

    CET1 ratio of 13.3% at end-2024, around 310 basis points above regulatory requirement

    +75% INCREASE IN DISTRIBUTION TO SHAREHOLDERS VS. 2023

    Proposed distribution of EUR 1,740 million1, equivalent to EUR 2.18 per share1, composed of:

    • a cash dividend of EUR 1.09 per share to be proposed to the General Meeting
    • a share buyback programme of EUR 872 million, equivalent to EUR 1.09 per share1. ECB approval has been obtained to launch the programme, due to start on 10 February 2025
    • Increase of the payout ratio to 50% of net income2

    2025 FINANCIAL TARGETS, STRONG CAPITAL, EXECUTION DISCIPLINE

    Revenue growth of more than +3%3 vs. 2024

    Decrease in costs above -1%3 vs. 2024

    Improvement of the cost-to-income ratio, less than 66% in 2025

    Cost of risk between 25 and 30 basis points in 2025

    Increase of the ROTE, more than 8% in 2025

    CET1 ratio above 13% post Basel IV throughout the year 2025

    With a solid CET1 ratio ahead of the capital trajectory, we are proposing to improve the distribution policy with:

    • an overall distribution payout ratio of 50% of net income2
    • a balanced distribution between cash dividends and share buybacks

    Slawomir Krupa, the Group’s Chief Executive Officer, commented:
    “In 2024, our performance improves materially. All our targets are exceeded and ahead of plan. Strong capital build-up, strong and sustainable business growth, strong cost control and risk management, and a material progress in our integration projects led to the doubling of the earnings per share. Against this strong backdrop, we are improving both the 2024 distribution and our distribution policy. I would like to thank the entire Societe Generale team for their dedication and remarkable commitment, every single day, to serving our clients and our Bank.
    We will continue to focus in 2025 on the relentless execution of our strategy, improving our performance even further.”

    1. GROUP CONSOLIDATED RESULTS
    In EURm Q4 24 Q4 23 Change 2024 2023 Change
    Net banking income 6,621 5,957 +11.1% +12.5%* 26,788 25,104 +6.7% +5.7%*
    Operating expenses (4,595) (4,666) -1.5% -0.7%* (18,472) (18,524) -0.3% -1.6%*
    Gross operating income 2,026 1,291 +57.0% +61.3%* 8,316 6,580 +26.4% +26.6%*
    Net cost of risk (338) (361) -6.4% -4.9%* (1,530) (1,025) +49.3% +48.6%*
    Operating income 1,688 930 +81.6% +87.4%* 6,786 5,555 +22.2% +22.5%*
    Net income/expense from other assets (11) (21) +48.9% +45.2%* (77) (113) +31.4% +26.3%*
    Income tax (413) (302) +36.6% +40.5%* (1,601) (1,679) -4.7% -4.9%*
    Net income 1,273 612 x 2.1 x 2.1* 5,129 3,449 +48.7% +49.6%*
    O.w. non-controlling interests 233 183 +27.0% +33.6%* 929 957 -3.0% -9.3%*
    Group net income 1,041 429 x 2.4 x 2.5* 4,200 2,492 +68.6% +73.2%*
    ROE 5.8% 1.5%     6.1% 3.1% +0.0% +0.0%*
    ROTE 6.6% 1.7%     6.9% 4.2% +0.0% +0.0%*
    Cost to income 69.4% 78.3%     69.0% 73.8% +0.0% +0.0%*

    Asterisks* in the document refer to data at constant perimeter and exchange rates

    The Board of Directors of Societe Generale, which met on 5 February 2025 under the chairmanship of Lorenzo Bini Smaghi, examined the Societe Generale Group’s results for Q4 24 and endorsed the 2024 financial statements.

    Net banking income 

    Net banking income stood at EUR 6.6 billion, up by +11.1% vs. Q4 23.

    Revenues of French Retail, Private Banking and Insurance were up by +15.5% vs. Q4 23 and totalled EUR 2.3 billion in Q4 24. Net interest income increased in Q4 24 (+36% vs. Q4 23), in line with the latest estimates. Assets under management in Private Banking and Insurance increased by +7% each in Q4 24 vs. Q4 23. Lastly, BoursoBank showed strong growth momentum with more than 460,000 new clients in the quarter, allowing to reach a client base of 7.2 million clients at end-December 2024, above the target of 7 million clients set for end-2024. In addition, BoursoBank posted a positive contribution to Group net income in 2024 for the second year in a row.

    Global Banking and Investor Solutions registered a +12.4% increase in revenues relative to Q4 23. Revenues amounted to EUR 2.5 billion for the quarter, driven by strong momentum across all businesses. Global Markets grew by 9.8% in Q4 24 vs. Q4 23. Revenues from the Equities business were up by +10%, reaching a record level for a fourth quarter. They were driven by favourable market conditions, particularly after the result of the presidential elections in the United States. Fixed Income and Currencies were up by +9% owing to solid commercial activity in financing and intermediation across all asset classes. In Financing and Advisory, solid commercial momentum was recorded in structured finance and the performance of M&A and advisory continued to rebound. Likewise, Global Transaction & Payment Services posted a +26% increase in revenues vs. Q4 23, driven by a sustained commercial development across all businesses, particularly in correspondent banking.

    Mobility, International Retail Banking and Financial Services’ revenues were up by +2.0% vs. Q4 23, mainly due to an increase in margins at Ayvens. International Retail Banking recorded a -3.6% fall in revenues vs. Q4 23 at EUR 1.0 billion, due to a scope effect related to the asset disposals finalised in Africa (Morocco, Chad, Congo, Madagascar). Revenues were up +3.4% at constant perimeter and exchange rates. Revenues from Mobility and Financial Services were up by +8.3% vs. Q4 23 mainly due to non-recuring items in Q4 23 and improved margins at Ayvens.

    The Corporate Centre recorded revenues of EUR -159 million in Q4 24.

    Over 2024, net banking income increased by +6.7% vs. 2023.

    Operating expenses 

    Operating expenses came out to EUR 4,595 million in Q4 24, down by -1.5% vs. Q4 23.
    They include a scope effect of around EUR 46 million related to the integration of Bernstein’s cash equity operations and a decrease in transformation costs of EUR 26 million. Excluding these items, operating expenses were down by nearly -2% in Q4 24 vs. Q4-23 owing to the effect of the cost saving measures implemented across all business lines.

    The cost-to-income ratio stood at 69.4% in Q4 24, significantly lower than in Q4 23 (78.3%).

    Over 2024, operating expenses remained relatively stable (-0.3% vs. 2023), thanks from rigorous cost management. The cost-to-income ratio stood at 69.0% (vs. 73.8% in 2023), a level below the target of 71% for 2024.

    Cost of risk

    The cost of risk fell to 23 basis points over the quarter (or EUR 338 million). This includes a EUR 386 million provision for non-performing loans (around 26 basis points) and a reversal of a provision on performing loans for EUR -48 million.

    At end-December, the Group’s provisions on performing loans amounted to EUR 3,119 million, stable relative to 30 September 2024. The EUR -453 million contraction relative to 31 December 2023 is mainly owing to the application of IFRS 5.

    The gross non-performing loan ratio stood at 2.81%4,5 at 31 December 2024, significantly down vs. end of September 2024 (2.95%). The net coverage ratio on the Group’s non-performing loans stood at 81%6 at 31 December 2024 (after taking into account guarantees and collateral).

    Net profits from other assets

    The Group recorded a net loss of EUR -11 million in Q4 24, mainly related to the accounting impacts of finalised asset sales, such as the disposals of our activities in Morocco and Madagascar.

    Group net income

    Group net income stood at EUR 1,041 million for the quarter, equating to a Return on Tangible Equity (ROTE) of 6.6%.

    Over the year, Group net income stood at EUR 4,200 million, equating to a Return on Tangible Equity (ROTE) of 6.9%.

    Shareholder distribution

    The Board of Directors approved the distribution policy for the 2024 fiscal year, aiming to distribute EUR 2.18 per share, equivalent to EUR 1,740 million, of which EUR 872 million in share buyback7. A cash dividend of EUR 1.09 per share will be proposed at the General Meeting of Shareholders on 20 May 2025. The dividend will be detached on 26 May 2025 and paid out on 28 May 2025.

    1. AN ESTABLISHED ESG STRATEGY FROM WHICH TO STEP FORWARD

    In 2024, Societe Generale accelerated the execution of its ESG roadmap, particularly with respect to the contribution to the environmental transition:

    • The Group now covers ~70% of companies’8 financed emissions, with 10 alignment targets for the carbon-intensive sectors. It has already reduced its oil and gas upstream exposure by more than 50% since the end of 20199
    • In Q2 24 and ahead of schedule, the Group reached its target of EUR 300 billion for sustainable finance planned for the period 2022-2025. A new target of EUR 500 billion, complementing the work carried out as part of the portfolio alignment, was announced for the period 2024-2030. This will help increase the orientation of financial flows towards decarbonization activities.

    The Group has broadened the scope of actions to prepare for a sustainable future by supporting new players and new technologies:

    • The EUR 1 billion investment for the transition, announced during the Capital Markets Day, has entered its operationalization phase
    • A new partnership with the EIB to unlock up to EUR 8 billion in the wind industry supply chain in Europe was signed in Q4 24.

    At the same time, ESG risk management continues to be strengthened, enhancing forward-looking assessments of environmental risk materiality and further integrating environmental, social and governance risks into the risk framework.
    Lastly, the Group is moving forward with its ambitions as a responsible employer: at the end of 2024, the “Group Leaders Circle” (Top 250) had ~30% women executives10 and ~30% international members. As announced during the Capital Markets Day, the EUR 100 million envelope commitment to reduce the gender pay gap was launched in 2023.

    1. THE GROUP’S FINANCIAL STRUCTURE

    At 31 December 2024, the Group’s Common Equity Tier 1 ratio stood at 13.3%11, around 310 basis points above the regulatory requirement. Likewise, the Liquidity Coverage Ratio (LCR) was well ahead of regulatory requirements at 156% at end-December 2024 (145% on average for the quarter), and the Net Stable Funding Ratio (NSFR) stood at 117% at end-December 2024.

    All liquidity and solvency ratios are well above the regulatory requirements.

      31/12/2024 31/12/2023 Requirements
    CET1(1) 13.3% 13.1% 10.24%
    Fully-loaded CET1 13.3% 13.1% 10.24%
    Tier 1 ratio (1) 16.1% 15.6% 12.17%
    Total Capital(1) 18.9% 18.2% 14.73%
    Leverage ratio(1) 4.34% 4.25% 3.60%
    TLAC (% RWA)(1) 29.7% 31.9% 22.31%
    TLAC (% leverage)(1) 8.0% 8.7% 6.75%
    MREL (% RWA)(1) 34.2% 33.7% 27.58%
    MREL (% leverage)(1) 9.2% 9.2% 6.23%
    End of period LCR 156% 160% >100%
    Period average LCR 145% 155% >100%
    NSFR 117% 119% >100%
    In EURbn 31/12/2024 31/12/2023
    Total consolidated balance sheet 1,574 1,554
    Shareholders’ equity (IFRS), Group share 70 66
    Risk-weighted assets 390 389
    O.w. credit risk 327 326
    Total funded balance sheet 952 970
    Customer loans 463 497
    Customer deposits 614 618

    At 31 December 2024, the parent company had issued EUR 43.2 billion in medium/long-term debt under its 2024 funding program. The subsidiaries had issued EUR 4.7 billion. In all, the Group has issued a total of EUR 47.9 billion.

    At 10 January 2025, the parent company 2025 funding program was executed at 47% for vanilla notes.

    The Group is rated by four rating agencies: (i) FitchRatings – long-term rating “A-”, stable outlook, senior preferred debt rating “A”, short-term rating “F1”; (ii) Moody’s – long-term rating (senior preferred debt) “A1”, negative outlook, short-term rating “P-1”; (iii) R&I – long-term rating (senior preferred debt) “A”, stable outlook; and (iv) S&P Global Ratings – long-term rating (senior preferred debt) “A”, stable outlook, short-term rating “A-1”.

    1. FRENCH RETAIL, PRIVATE BANKING AND INSURANCE
    In EURm Q4 24 Q4 23 Change 2024 2023 Change
    Net banking income 2,267 1,963 +15.5% 8,657 8,053 +7.5%
    Of which net interest income 1,091 801 +36.2% 3,868 3,199 +20.9%
    Of which fees 1,028 948 +8.5% 4,108 3,975 +3.3%
    Operating expenses (1,672) (1,683) -0.7% (6,634) (6,756) -1.8%
    Gross operating income 596 280 x 2.1 2,024 1,297 +56.0%
    Net cost of risk (115) (163) -29.6% (712) (505) +41.0%
    Operating income 481 118 x 4.1 1,312 792 +65.6%
    Net profits or losses from other assets (2) 5 n/s 6 9 -35.1%
    Group net income 360 90 x 4.0 991 596 +66.2%
    RONE 9.1% 2.3%   6.3% 3.9%  
    Cost to income 73.7% 85.7%   76.6% 83.9%  

    Commercial activity

    SG Network, Private Banking and Insurance 

    The SG Network’s average outstanding deposits amounted to EUR 232 billion in Q4 24, down by -1% on Q4 23, with strong shift of inflows into investment products and savings life insurance.

    The SG Network’s average loan outstandings contracted by -4% vs. Q4 23 to EUR 194 billion, but -2.5% excluding PGE (state guaranteed loans). Outstanding loans to corporate and professional clients grew vs. Q3 24 excluding state guaranteed PGE loans, and individual clients lending experienced an increased commercial momentum.

    The average loan to deposit ratio came to 83.6% in Q4 24, down by 2.6 percentage points relative to Q4 23.

    Private Banking activities saw their assets under management12 maintain a record level of EUR 154 billion in Q4 24, up by +7% vs. Q4 23. Net gathering stood at EUR 6.3 billion in 2024, the annual net asset gathering pace (net new money divided by AuM) being at +4% in 2024. Net banking income came to EUR 348 million over the quarter, a decrease of -2% vs. Q4 23. It stands at EUR 1,469 million for 2024, unchanged from 2023.

    Insurance, which covers activities in and outside France, posted a very strong commercial performance. Life insurance outstandings increased sharply by +7% vs. Q4 23 to reach a record EUR 146 billion at                end-December 2024. The share of unit-linked products remained high at 40%. Savings Life insurance gross inflows amounted to EUR 3.4 billion in Q4 24, and EUR 18.3 billion for 2024, up by +42% vs. 2023.

    Personal protection and P&C premia were up by +3% vs. Q4 23 (+5% at constant perimeter).

    BoursoBank 

    BoursoBank’s growth momentum continued with more than 460K new clients in the fourth quarter of 2024. BoursoBank reached almost 7.2 million clients in December 2024, above 2024 target.

    Thanks notably to its comprehensive banking offer and recognized among the “Digital Leaders”13, the Bank has a low attrition rate (~3% in 2024), still down vs. 2023.

    BoursoBank continued its profitable growth trajectory in 2024 with a cost per client down by -17.0% vs. 2023 with an expanding client base, more than 1.3 million net clients over 12 months (+22.4% vs. 2023).

    Loans outstanding improved by +5.4% relative to Q4 23, at EUR 16 billion in Q4 24.

    Average outstanding in savings including deposits and financial savings were +15.5% higher vs. Q4 23 at EUR 64 billion. Deposits outstanding totalled EUR 39 billion in Q4 24, posting another strong increase of +15.4% vs. Q4 23, driven by interest-bearing savings. Average life insurance outstandings, at EUR 13 billion in Q4 24, rose by +10.2% vs. Q4 23 (o/w 48% in unit-lined products, +3.8 percentage points vs. Q4 23). The activity continued to register strong gross inflows over the quarter (+50.4% vs. Q4 23, 65% unit-linked products).

    For the second year in a row, BoursoBank recorded a positive contribution to Group net income in 2024.

    At end of 2025, BoursoBank aims to exceed 8 million clients.

    Net banking income

    Over the quarter, revenues amounted to EUR 2,267 million (including PEL/CEL provision), up by +15% compared with Q4 23 and up by +1% compared with Q3 24. Net interest income grew by +36% vs. Q4 23 and +3% vs. Q3 24. Fee income rose by +9% relative to Q4 23.

    Over the year, revenues reached EUR 8,657 million, up by +8% compared with 2023 (including PEL/CEL provision). Net interest income was up by +21% vs. 2023. Fees increased by +3% relative to 2023.

    Operating expenses

    Over the quarter, operating expenses came to EUR 1,672 million, down -1% compared to Q4 23. The cost-to-income ratio reached 73.7% in Q4 24 and improved by 12 percentage points vs. Q4 23.

    Over the year, operating expenses totalled EUR 6,634 million, decreasing by -2% vs. 2023.                                         The cost-to-income ratio stood at 76.6% and improved by 7.3 percentage points compared with 2023.

    Cost of risk

    Over the quarter, the cost of risk amounted to EUR 115 million, or 20 basis points, down compared with Q3 24 (30 basis points).

    Over the year, the cost of risk totalled EUR 712 million, or 30 basis points.

    Group net income

    Over the quarter, Group net income totalled EUR 360 million. RONE stood at 9.1% in Q4 24.

    Over the year, Group net income totalled EUR 991 million. RONE stood at 6.3% for the year.

    1. GLOBAL BANKING AND INVESTOR SOLUTIONS
    In EURm Q4 24 Q4 23 Change 2024 2023 Change
    Net banking income 2,457 2,185 +12.4% +11.6%* 10,122 9,642 +5.0% +4.8%*
    Operating expenses (1,644) (1,601) +2.7% +2.0%* (6,542) (6,788) -3.6% -3.7%*
    Gross operating income 812 584 +39.0% +37.9%* 3,580 2,854 +25.4% +25.0%*
    Net cost of risk (97) (38) x 2.5 x 2.5* (126) (30) x 4.2 x 4.3*
    Operating income 715 546 +31.0% +30.1%* 3,455 2,824 +22.3% +21.9%*
    Group net income 627 467 +34.4% +33.0%* 2,788 2,280 +22.2% +21.7%*
    RONE 16.6% 12.2% +0.0% +0.0%* 18.4% 14.8% +0.0% +0.0%*
    Cost to income 66.9% 73.3% +0.0% +0.0%* 64.6% 70.4% +0.0% +0.0%*

    Net banking income

    Global Banking & Investor Solutions delivered an excellent fourth quarter, with revenues up by +12.4% compared with Q4 23, at EUR 2,457 million.

    Over 2024, revenues reached a record14 level of EUR 10,122 million, up by +5.0% vs. FY23, owing to excellent momentum across all business lines.

    Global Markets and Investor Services recorded a sharp rise in revenues over the quarter vs Q4 23 of +9.8% to EUR 1,493 million. Over 2024, they totalled EUR 6,557 million, up by +4.5% vs. FY 2023. This growth is the result of solid performance across all activities.

    Global Markets posted both a record fourth quarter and a record1 year with revenues, respectively, of EUR 1,332 million, up +9.5% vs. Q4 23, and EUR 5,884 million, up +5.6% vs. 2023, in a market environment that remains conducive.

    The Equities business delivered an excellent performance, with both a record year and fourth quarter. In Q4 24, revenues amounted to EUR 831 million, a steady increase of +10.0% vs. Q4 23, benefiting from a strong commercial dynamic post US elections especially in flow, listed products and financing activities. Over 2024, revenues increased sharply by +12.2% versus 2023 to EUR 3,569 million.

    Fixed Income and Currencies grew by +8.8% to EUR 501 million in Q4 24, thanks to a solid performance across all products, with an increased client engagement across Corporates and Financial Institutions following the impact of the US elections on rates and currencies. In addition, European rates and currencies franchise outperformed, together with solid secured financing opportunities in the Americas. Over 2024, revenues decreased slightly by -3.2% to EUR 2,315 million.

    Securities Services’ revenues were sharply up by +12.4% versus Q4 23 at EUR 162 million but increased by +4.8% excluding the impact of equity participations. The business continued to reap the benefit of a positive fee generation trend and robust momentum in fund distribution, especially in France and Italy. Over 2024, revenues were down by -4.0%, but up by +2.8% excluding equity participations. Assets under Custody and Assets under Administration amounted to EUR 4,921 billion and EUR 623 billion, respectively.

    The Financing and Advisory business posted revenues of EUR 964 million, up by +16.7% vs. Q4 23. Over 2024, revenues totalled EUR 3,566 million, up by +5.8% vs. 2023.

    The Global Banking & Advisory business grew steadily by +13.7% compared with Q4 23 with a double digit increase in fees vs. Q4 23 driven by strong origination and distribution volumes in Fund Financing and Structured Finance. The rebound in M&A and Advisory continued in the fourth quarter with a strong increase in revenues. This is the second best quarter ever in terms of revenues, close to record Q4 22. Over 2024, revenues grew by +3.2% vs. 2023.

    The Global Transaction & Payment Services business once again delivered an excellent performance compared with Q4 23. The sharp increase in revenues of +26.1% was driven by solid commercial momentum in all activities, as well as a high level of fee generation, led by a strong performance in correspondent banking. Over 2024, revenues saw a steady increase of +13.9%. This represents a record year and fourth quarter.

    Operating expenses

    Operating expenses came out to EUR 1,644 million for the quarter, including around EUR 32 million in transformation costs. They are up by +2.7% relative to Q4 23. The cost-to-income ratio came to 66.9% in Q4 24.

    Over 2024, operating expenses decreased by -3.6% compared with 2023 and the cost-to-income ratio came to 64.6%.

    Cost of risk

    Over the quarter, the cost of risk was EUR 97 million, or 24 basis points vs. 9 basis points in Q4 23.

    Over 2024, the cost of risk was EUR 126 million, or 8 basis points.

    Group net income

    Group net income recorded strong growth, up by +34.4% vs. Q4 23 to EUR 627 million. Over 2024, Group net income rose sharply by +22.2% to EUR 2,788 million.

    Global Banking and Investor Solutions reported significant RONE of 16.6% over the quarter and 18.4% over 2024.

    1. MOBILITY, INTERNATIONAL RETAIL BANKING AND FINANCIAL SERVICES
    In EURm Q4 24 Q4 23 Change 2024 2023 Change
    Net banking income 2,056 2,016 +2.0% +6.7%* 8,458 8,507 -0.6% -3.8%*
    Operating expenses (1,240) (1,281) -3.2% +0.8%* (5,072) (4,760) +6.6% +1.7%*
    Gross operating income 816 734 +11.1% +17.0%* 3,386 3,747 -9.6% -10.9%*
    Net cost of risk (133) (137) -2.5% +2.2%* (705) (486) +45.1% +43.5%*
    Operating income 682 598 +14.2% +20.4%* 2,681 3,261 -17.8% -19.1%*
    Net income/expense from other assets (2) (12) +86.1% +84.3%* 96 (11) n/s n/s
    Non-controlling interests 203 152 +33.1% +39.6%* 826 826 -0.1% -7.1%*
    Group net income 314 284 +10.5% +16.1%* 1,270 1,609 -21.1% -20.0%*
    RONE 12.0% 11.0%     12.2% 16.6%    
    Cost to income 60.3% 63.6%     60.0% 56.0%    

    (2)()

    Commercial activity

    International Retail Banking

    International Retail Banking15 activity remained strong in Q4 24 with outstanding loans at EUR 59 billion, up by +3.4%* vs. Q4 23 and deposits at EUR 74 billion, up by +3.9%* vs. Q4 23.

    Europe continues to post good commercial performance for both entities in individual and corporate client segments. With EUR 43 billion in Q4 24, outstanding loans increased by 4.9%* vs. Q4 23, across segments in Romania and more particularly in home loans in the Czech Republic. Outstanding deposits totalled EUR 55 billion in Q4 24, up by +3.8%* vs. Q4 23, mostly driven by Romania.

    In the Africa, Mediterranean Basin and Overseas France network, outstanding loans were stable* vs. Q4 23, with EUR 16 billion in Q4 24, on the back of the good performance in retail. Outstanding deposits of EUR 20 billion in Q4 24 increased by 4.0%* vs. Q4 23, mainly driven by sight deposits in retail.

    Mobility and Financial Services

    Overall, Mobility and Financial Services maintained a good commercial performance.

    Ayvens’ earning assets totalled EUR 53.6 billion at end-December 2024, a +2.9% increase vs. end-December 2023.

    Consumer Finance posted outstandings of EUR 23 billion in Q4 24, still down by -4.0% vs. Q4 23.

    With EUR 15 billion in Q4 24, Equipment Finance outstandings slightly decreased by -1.4% vs. Q4 23.

    Net banking income

    Over the quarter, Mobility, International Retail Banking and Financial Services’ revenues rose by +2.0% vs. Q4 23 to EUR 2,056 million in Q4 24.

    Over the year, revenues were stable compared with 2023 at EUR 8,458 million.

    International Retail Banking revenues reached EUR 1,029 million, up by +3.4%* vs. Q4 23. Over 2024, revenues amounted to EUR 4,161 million, up by 3.8%* vs. 2023.

    Revenues in Europe, which amounted to EUR 539 million in Q4 24, rose by +6.4%* vs. Q4 23, driven by the +3.5%* increase in net interest income for both KB in Czech Republic and BRD in Romania. Fee income increased strongly over the quarter in the Czech Republic, up by +29.5%* vs. Q4 23. Over 2024, revenues improved by +2.8%* vs. 2023 at EUR 2,028 million.

    The Africa, Mediterranean Basin and French Overseas network maintained a sustained level of revenues in Q4 24 of EUR 490 million, stable* vs. Q4 23, mainly driven by fee growth. Over 2024, revenues improved by +4.8%* vs. 2023 at EUR 2,133 million.

    Overall, revenues from Mobility and Financial Services were up by 8.3% vs. Q4 23 at EUR 1,026 million. They remained stable vs. 2023, at EUR 4,298 million in 2024.

    At Ayvens, net banking income stood at EUR 707 million in Q4 24, a sharp increase of +16,3% vs. Q4 23 as reported, and of +2.0% adjusted for non-recurring items16. The amount of margins stood at 541 basis points, generating revenues up +12%1 vs. T4-23. The used car sales markets are gradually normalising, as expected, with an average Used Car Sale (UCS) result per unit of EUR 1,2671 per unit this quarter, vs. EUR 1,4201 in Q3 24 and EUR 1,7061 in Q4 23. In 2024, Ayvens posted an increase in revenues of +1.2% vs. 2023 (at EUR 3,015 million), with an increase in underlying margins.

    The Consumer Finance entities posted revenues of EUR 216 million in Q4 24, still down by -4.2% vs. Q4 23. These are stabilizing from Q3 24, with an improvement in the margin for new production. Revenues from the Equipment Finance business was down this quarter by -9.3% vs. Q4 23, with EUR 103 million in Q4 24. In 2024, overall revenues for both businesses decreased by -4.0% vs. 2023.

    Operating expenses

    Over the quarter, operating expenses remained contained at EUR 1,240 million (-3.2% vs. Q4 23, stable* at constant perimeter and exchange rates). The cost-to-income ratio stood at 60.3% in Q4 24 vs. 63.6% in Q4 23.

    Over the year, operating expenses came to EUR 5,072 million, up by +6.6% vs. 2023. They include transformation costs of around EUR 200 million.

    International Retail Banking recorded an increase in costs of +4.8%* vs. Q4 23 (down by -2.1% at current perimeter and exchange rates, to EUR 577 million in Q4 24), still including the new bank tax in Romania, implemented since January 2024.

    Mobility and Financial Services costs reached EUR 663 million in Q4 24, down by -4.2% vs. Q4 23.

    Cost of risk

    Over the quarter, the cost of risk amounted to EUR 133 million or 32 basis points, which was considerably lower than in Q3 24 (48 basis points).

    Over the year, the cost of risk normalised to a level of 42 basis points, compared with 32 basis points in 2023.

    Group net income

    Over the quarter, Group net income came out to EUR 314 million, up by +10.5% vs. Q4 23. RONE stood at 12.0% in Q4 24. RONE was 16.3% in International Retail Banking, and 9.1% in Mobility and Financial Services in Q4 24.

    Over 2024, Group net income came out to EUR 1,270 million, down by -21.1% vs. 2023. RONE stood at 12.2% in 2024. RONE was 16.4% in International Retail Banking, and 9.4% in Mobility and Financial Services in 2024.

    1. CORPORATE CENTRE
    In EURm Q4 24 Q4 23 Change 2024 2023 Change
    Net banking income (159) (207) +23.4% +24.4%* (450) (1,098) +59.0% +59.6%*
    Operating expenses (39) (101) -61.8% -61.8%* (224) (220) +1.6% +1.4%*
    Gross operating income (197) (308) +36.0% +36.5%* (674) (1,318) +48.9% +49.5%*
    Net cost of risk 7 (23) n/s n/s 12 (4) n/s n/s
    Net income/expense from other assets (7) (15) +51.3% +51.3%* (179) (111) -61.3% -61.4%*
    Income tax (37) (45) -17.9% -16.6%* 81 (130) n/s n/s
    Group net income (261) (412) +36.7% +37.0%* (848) (1,994) +57.5% +57.8%*

    The Corporate Centre includes:

    • the property management of the Group’s head office,
    • the Group’s equity portfolio,
    • the Treasury function for the Group,
    • certain costs related to cross-functional projects, as well as several costs incurred by the Group that are not re-invoiced to the businesses.

    Net banking income

    Over the quarter, the Corporate Centre’s net banking income totalled EUR -159 million, vs. EUR  – 207 million in Q4 23.

    Over the year, the Corporate Centre’s net banking income totalled EUR -450 million, vs. EUR – 1,098 million in 2023. It includes the booking in Q3 24 of exceptional proceeds received of approximately EUR 0.3 billion17.

    Operating expenses

    Over the quarter, operating expenses totalled EUR -39 million, vs. EUR -101 million in Q4 23.

    Over the year, operating expenses totalled EUR -224 million, vs. EUR -220 million in 2023.

    Net losses from other assets

    Pursuant notably to the application of IFRS 5, the Group booked in Q4 24 various impacts from ongoing disposals of assets.

    Group net income

    Over the quarter, the Corporate Centre’s Group net income totalled EUR -261 million, vs. EUR -412 million in Q4 23.

    Over the year, the Corporate Centre’s Group net income totalled EUR -848 million, vs. EUR -1,994 million in 2023.

    To be noted that starting from 2025, normative return to businesses will be based on a 13% capital allocation.

          8.   2024 AND 2025 FINANCIAL CALENDAR

    2025 Financial communication calendar
    April 30, 2025 First quarter 2025 results
    May 20, 2025 2024 Combined General Meeting
    May 26, 2025 Dividend detachment
    May 28, 2025 Dividend payment
    July 31, 2025 Second quarter and first half 2025 results
    October 30, 2025          Third quarter and nine months 2025 results
    The Alternative Performance Measures, notably the notions of net banking income for the pillars, operating expenses, cost of risk in basis points, ROE, ROTE, RONE, net assets and tangible net assets are presented in the methodology notes, as are the principles for the presentation of prudential ratios.

    This document contains forward-looking statements relating to the targets and strategies of the Societe Generale Group.

    These forward-looking statements are based on a series of assumptions, both general and specific, in particular the application of accounting principles and methods in accordance with IFRS (International Financial Reporting Standards) as adopted in the European Union, as well as the application of existing prudential regulations.

    These forward-looking statements have also been developed from scenarios based on a number of economic assumptions in the context of a given competitive and regulatory environment. The Group may be unable to:

    – anticipate all the risks, uncertainties or other factors likely to affect its business and to appraise their potential consequences;

    – evaluate the extent to which the occurrence of a risk or a combination of risks could cause actual results to differ materially from those provided in this document and the related presentation.

    Therefore, although Societe Generale believes that these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, including matters not yet known to it or its management or not currently considered material, and there can be no assurance that anticipated events will occur or that the objectives set out will actually be achieved. Important factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among others, overall trends in general economic activity and in Societe Generale’s markets in particular, regulatory and prudential changes, and the success of Societe Generale’s strategic, operating and financial initiatives.

    More detailed information on the potential risks that could affect Societe Generale’s financial results can be found in the section “Risk Factors” in our Universal Registration Document filed with the French Autorité des Marchés Financiers (which is available on https://investors.societegenerale.com/en).

    Investors are advised to take into account factors of uncertainty and risk likely to impact the operations of the Group when considering the information contained in such forward-looking statements. Other than as required by applicable law, Societe Generale does not undertake any obligation to update or revise any forward-looking information or statements. Unless otherwise specified, the sources for the business rankings and market positions are internal.

          9.   APPENDIX 1: FINANCIAL DATA

    GROUP NET INCOME BY CORE BUSINESS

    In EURm Q4 24 Q4 23 Variation 2024 2023 Variation
    French Retail, Private Banking and Insurance 360 90 x 4.0 991 596 +66.2%
    Global Banking and Investor Solutions 627 467 +34.4% 2,788 2,280 +22.2%
    Mobility, International Retail Banking & Financial Services 314 284 +10.5% 1,270 1,609 -21.1%
    Core Businesses 1,301 841 +54.7% 5,048 4,486 +12.5%
    Corporate Centre (261) (412) +36.7% (848) (1,994) +57.5%
    Group 1,041 429 x 2.4 4,200 2,492 +68.6%

    MAIN EXCEPTIONAL ITEMS

    In EURm Q4 24 Q4 23 12M24 12M23
    Net Banking Income – Total exceptional items 0 41 287 (199)
    One-off legacy items – Corporate Centre 0 41 0 (199)
    Exceptional proceeds received – Corporate Centre 0 0 287 0
             
    Operating expenses – Total one-off items and transformation charges (76) (102) (613) (765)
    Transformation charges (76) (102) (613) (730)
    Of which French Retail, Private Banking and Insurance 7 18 (132) (312)
    Of which Global Banking & Investor Solutions (32) (64) (236) (167)
    Of which Mobility, International Retail Banking & Financial Services (51) (56) (199) (251)
    Of which Corporate Centre 0 0 (47) 0
    One-off items 0 0 0 (35)
    Of which French Retail, Private Banking and Insurance 0 0 0 60
    Of which Global Banking & Investor Solutions 0 0 0 (95)
             
    Other one-off items – Total (7) (115) (74) (820)
    Net profits or losses from other assets (7) (15) (74) (112)
    Of which Mobility, International Retail Banking and Financial Services 0 0 86 0
    Of which Corporate Centre (7) (15) (160) (112)
    Goodwill impairment – Corporate Centre 0 0 0 (338)
    Provision of Deferred Tax Assets – Corporate Centre 0 (100) 0 (370)

    CONSOLIDATED BALANCE SHEET

    In EUR m   31/12/2024 31/12/2023
    Cash, due from central banks   201,680 223,048
    Financial assets at fair value through profit or loss   526,048 495,882
    Hedging derivatives   9,233 10,585
    Financial assets at fair value through other comprehensive income   96,024 90,894
    Securities at amortised cost   32,655 28,147
    Due from banks at amortised cost   84,051 77,879
    Customer loans at amortised cost   454,622 485,449
    Revaluation differences on portfolios hedged against interest rate risk   (292) (433)
    Insurance and reinsurance contracts assets   615 459
    Tax assets   4,687 4,717
    Other assets   70,903 69,765
    Non-current assets held for sale   26,426 1,763
    Investments accounted for using the equity method   398 227
    Tangible and intangible fixed assets   61,409 60,714
    Goodwill   5,086 4,949
    Total   1,573,545 1,554,045
    In EUR m   31/12/2024 31/12/2023
    Due to central banks   11,364 9,718
    Financial liabilities at fair value through profit or loss   396,614 375,584
    Hedging derivatives   15,750 18,708
    Debt securities issued   162,200 160,506
    Due to banks   99,744 117,847
    Customer deposits   531,675 541,677
    Revaluation differences on portfolios hedged

    against interest rate risk

    		   (5,277) (5,857)
    Tax liabilities   2,237 2,402
    Other liabilities   90,786 93,658
    Non-current liabilities held for sale   17,079 1,703
    Insurance and reinsurance contracts liabilities   150,691 141,723
    Provisions   4,085 4,235
    Subordinated debts   17,009 15,894
    Total liabilities   1,493,957 1,477,798
    Shareholder’s equity   – –
    Shareholders’ equity, Group share   – –
    Issued common stocks and capital reserves   21,281 21,186
    Other equity instruments   9,873 8,924
    Retained earnings   33,863 32,891
    Net income   4,200 2,493
    Sub-total   69,217 65,494
    Unrealised or deferred capital gains and losses   1,039 481
    Sub-total equity, Group share   70,256 65,975
    Non-controlling interests   9,332 10,272
    Total equity   79,588 76,247
    Total   1,573,545 1,554,045

          10.    APPENDIX 2: METHODOLOGY

    1 –The financial information presented for the fourth quarter and full year 2024 was examined by the Board of Directors on February 5th, 2025 and has been prepared in accordance with IFRS as adopted in the European Union and applicable at that date. The audit procedures carried out by the Statutory Auditors on the consolidated financial statements are in progress.

    2 – Net banking income

    The pillars’ net banking income is defined on page 42 of Societe Generale’s 2024 Universal Registration Document. The terms “Revenues” or “Net Banking Income” are used interchangeably. They provide a normalised measure of each pillar’s net banking income taking into account the normative capital mobilised for its activity.

    3 – Operating expenses

    Operating expenses correspond to the “Operating Expenses” as presented in note 5 to the Group’s consolidated financial statements as at December 31st, 2023. The term “costs” is also used to refer to Operating Expenses. The Cost/Income Ratio is defined on page 42 of Societe Generale’s 2024 Universal Registration Document.

    4 – Cost of risk in basis points, coverage ratio for non-performing loan outstandings

    The cost of risk is defined on pages 43 and 770 of Societe Generale’s 2024 Universal Registration Document. This indicator makes it possible to assess the level of risk of each of the pillars as a percentage of balance sheet loan commitments, including operating leases.

    In EURm   Q4 24 Q4 23 2024 2023
    French Retail, Private Banking and Insurance Net Cost Of Risk 115 163 712 505
    Gross loan Outstandings 233,298 240,533 235,539 246,701
    Cost of Risk in bp 20 27 30 20
    Global Banking and Investor Solutions Net Cost Of Risk 97 38 126 30
    Gross loan Outstandings 160,551 168,799 162,749 169,823
    Cost of Risk in bp 24 9 8 2
    Mobility, International Retail Banking & Financial Services Net Cost Of Risk 133 137 705 486
    Gross loan Outstandings 167,911 164,965 167,738 150,161
    Cost of Risk in bp 32 33 42 32
    Corporate Centre Net Cost Of Risk (7) 23 (12) 4
    Gross loan Outstandings 25,730 23,075 24,700 20,291
    Cost of Risk in bp (11) 40 (5) 2
    Societe Generale Group Net Cost Of Risk 338 361 1,530 1,025
    Gross loan Outstandings 587,490 597,371 590,725 586,977
    Cost of Risk in bp 23 24 26 17

    The gross coverage ratio for non-performing loan outstandings is calculated as the ratio of provisions recognised in respect of the credit risk to gross outstandings identified as in default within the meaning of the regulations, without taking account of any guarantees provided. This coverage ratio measures the maximum residual risk associated with outstandings in default (“non-performing loans”).

    5 – ROE, ROTE, RONE

    The notions of ROE (Return on Equity) and ROTE (Return on Tangible Equity), as well as their calculation methodology, are specified on pages 43 and 44 of Societe Generale’s 2024 Universal Registration Document. This measure makes it possible to assess Societe Generale’s return on equity and return on tangible equity.
    RONE (Return on Normative Equity) determines the return on average normative equity allocated to the Group’s businesses, according to the principles presented on page 44 of Societe Generale’s 2024 Universal Registration Document.
    Group net income used for the ratio numerator is the accounting Group net income adjusted for “Interest paid and payable to holders if deeply subordinated notes and undated subordinated notes, issue premium amortisation”. For ROTE, income is also restated for goodwill impairment.
    Details of the corrections made to the accounting equity in order to calculate ROE and ROTE for the period are given in the table below:

    ROTE calculation: calculation methodology

    End of period (in EURm) Q4 24 Q4 23 2024 2023
    Shareholders’ equity Group share 70,256 65,975 70,256 65,975
    Deeply subordinated and undated subordinated notes (10,526) (9,095) (10,526) (9,095)
    Interest payable to holders of deeply & undated subordinated notes, issue premium amortisation(1) (25) (21) (25) (21)
    OCI excluding conversion reserves 757 636 757 636
    Distribution provision(2) (1,740) (995) (1,740) (995)
    Distribution N-1 to be paid – – – –
    Equity end-of-period for ROE 58,722 56,500 58,722 56,500
    Average equity for ROE 58,204 56,607 57,223 56,396
    Average Goodwill(3) (4,192) (4,068) (4,108) (4,011)
    Average Intangible Assets (2,883) (3,188) (2,921) (3,143)
    Average equity for ROTE 51,129 49,351 50,194 49,242
             
    Group net Income 1,041 430 4,200 2,493
    Interest paid and payable to holders of deeply subordinated notes and undated subordinated notes, issue premium amortisation (199) (215) (720) (759)
    Cancellation of goodwill impairment – – – 338
    Adjusted Group net Income 842 215 3,480 2,073
    ROTE 6.6% 1.7% 6.9% 4.2%

    181920

    RONE calculation: Average capital allocated to Core Businesses (in EURm)

    In EURm Q4 24 Q4 23 Change 2024 2023 Change
    French Retail , Private Banking and Insurance 15,731 15,445 +1.9% 15,634 15,454 +1.2%
    Global Banking and Investor Solutions 15,129 15,247 -0.8% 15,147 15,426 -1.8%
    Mobility, International Retail Banking & Financial Services 10,460 10,313 +1.4% 10,433 9,707 +7.5%
    Core Businesses 41,320 41,006 +0.8% 41,214 40,587 +1.5%
    Corporate Center 16,884 15,601 +8.2% 16,009 15,809 +1.3%
    Group 58,204 56,607 +2.8% 57,223 56,396 +1.5%

    6 – Net assets and tangible net assets

    Net assets and tangible net assets are defined in the methodology, page 45 of the Group’s 2024 Universal Registration Document. The items used to calculate them are presented below:
    2122

    End of period (in EURm) 2024 2023 2022
    Shareholders’ equity Group share 70,256 65,975 66,970
    Deeply subordinated and undated subordinated notes (10,526) (9,095) (10,017)
    Interest of deeply & undated subordinated notes, issue premium amortisation(1) (25) (21) (24)
    Book value of own shares in trading portfolio 8 36 67
    Net Asset Value 59,713 56,895 56,996
    Goodwill(2) (4,207) (4,008) (3,652)
    Intangible Assets (2,871) (2,954) (2,875)
    Net Tangible Asset Value 52,635 49,933 50,469
           
    Number of shares used to calculate NAPS(3) 796,498 796,244 801,147
    Net Asset Value per Share 75.0 71.5 71.1
    Net Tangible Asset Value per Share 66.1 62.7 63.0

    7 – Calculation of Earnings Per Share (EPS)

    The EPS published by Societe Generale is calculated according to the rules defined by the IAS 33 standard (see page 44 of Societe Generale’s 2024 Universal Registration Document). The corrections made to Group net income in order to calculate EPS correspond to the restatements carried out for the calculation of ROE and ROTE.
    The calculation of Earnings Per Share is described in the following table:

    Average number of shares (thousands) 2024 2023 2022
    Existing shares 801,915 818,008 845,478
    Deductions      
    Shares allocated to cover stock option plans and free shares awarded to staff 4,402 6,802 6,252
    Other own shares and treasury shares 2,344 11,891 16,788
    Number of shares used to calculate EPS(4) 795,169 799,315 822,437
    Group net Income (in EUR m) 4,200 2,493 1,825
    Interest on deeply subordinated notes and undated subordinated notes (in EUR m) (720) (759) (596)
    Adjusted Group net income (in EUR m) 3,480 1,735 1,230
    EPS (in EUR) 4.38 2.17 1.50

    2324
    8 – The Societe Generale Group’s Common Equity Tier 1 capital is calculated in accordance with applicable CRR2/CRD5 rules. The fully loaded solvency ratios are presented pro forma for current earnings, net of dividends, for the current financial year, unless specified otherwise. When there is reference to phased-in ratios, these do not include the earnings for the current financial year, unless specified otherwise. The leverage ratio is also calculated according to applicable CRR2/CRD5 rules including the phased-in following the same rationale as solvency ratios.

    9 – Funded balance sheet, loan to deposit ratio

    The funded balance sheet is based on the Group financial statements. It is obtained in two steps:

    • A first step aiming at reclassifying the items of the financial statements into aggregates allowing for a more economic reading of the balance sheet. Main reclassifications:

    Insurance: grouping of the accounting items related to insurance within a single aggregate in both assets and liabilities.
    Customer loans: include outstanding loans with customers (net of provisions and write-downs, including net lease financing outstanding and transactions at fair value through profit and loss); excludes financial assets reclassified under loans and receivables in accordance with the conditions stipulated by IFRS 9 (these positions have been reclassified in their original lines).
    Wholesale funding: Includes interbank liabilities and debt securities issued. Financing transactions have been allocated to medium/long-term resources and short-term resources based on the maturity of outstanding, more or less than one year.
    Reclassification under customer deposits of the share of issues placed by French Retail Banking networks (recorded in medium/long-term financing), and certain transactions carried out with counterparties equivalent to customer deposits (previously included in short term financing).
    Deduction from customer deposits and reintegration into short-term financing of certain transactions equivalent to market resources.

    • A second step aiming at excluding the contribution of insurance subsidiaries, and netting derivatives, repurchase agreements, securities borrowing/lending, accruals and “due to central banks”.

    The Group loan/deposit ratio is determined as the division of the customer loans by customer deposits as presented in the funded balance sheet.

    NB (1) The sum of values contained in the tables and analyses may differ slightly from the total reported due to rounding rules.
    (2) All the information on the results for the period (notably: press release, downloadable data, presentation slides and supplement) is available on Societe Generale’s website:
    www.societegenerale.com in the “Investor” section.

    Societe Generale

    Societe Generale is a top tier European Bank with more than 126,000 employees serving about 25 million clients in 65 countries across the world. We have been supporting the development of our economies for 160 years, providing our corporate, institutional, and individual clients with a wide array of value-added advisory and financial solutions. Our long-lasting and trusted relationships with the clients, our cutting-edge expertise, our unique innovation, our ESG capabilities and leading franchises are part of our DNA and serve our most essential objective – to deliver sustainable value creation for all our stakeholders.

    The Group runs three complementary sets of businesses, embedding ESG offerings for all its clients:

    • French Retail, Private Banking and Insurance, with leading retail bank SG and insurance franchise, premium private banking services, and the leading digital bank BoursoBank.
    • Global Banking and Investor Solutions, a top tier wholesale bank offering tailored-made solutions with distinctive global leadership in equity derivatives, structured finance and ESG.
    • Mobility, International Retail Banking and Financial Services, comprising well-established universal banks (in Czech Republic, Romania and several African countries), Ayvens (the new ALD I LeasePlan brand), a global player in sustainable mobility, as well as specialized financing activities.

    Committed to building together with its clients a better and sustainable future, Societe Generale aims to be a leading partner in the environmental transition and sustainability overall. The Group is included in the principal socially responsible investment indices: DJSI (Europe), FTSE4Good (Global and Europe), Bloomberg Gender-Equality Index, Refinitiv Diversity and Inclusion Index, Euronext Vigeo (Europe and Eurozone), STOXX Global ESG Leaders indexes, and the MSCI Low Carbon Leaders Index (World and Europe).

    For more information, you can follow us on Twitter/X @societegenerale or visit our website societegenerale.com.

    1 Based on the number of shares in circulation at 31 December 2024 excluding own shares, subject to usual approvals from the General Meeting
    2 Reported Group net income, after deduction of interest on deeply subordinated notes and undated subordinated notes, restated from non-cash items that have no impact on CET1 ratio
    3 Excluding assets sold
    4 Ratio calculated according to EBA methodology published on 16 July 2019
    5 Ratio excluding loans outstanding of companies currently being disposed of in compliance with IFRS 5 (in particular Société Générale Equipment Finance, SG Marocaine de Banques and La Marocaine Vie)
    6 Ratio of S3 provisions, guarantees and collaterals over gross outstanding non-performing loans
    7 The share buyback programme and the subsequent capital reduction, aim also, and in priority, at fully offsetting the dilutive impact of the future capital increase as part of the next Group Employee Share Ownership Plan, the principle of which was adopted by the Board of Directors on February 5, 2025
    8 Scopes 1 & 2 of corporate clients’ financed emissions
    9Target: -80% upstream exposure reduction by 2030 vs. 2019, with an intermediary step in 2025 at -50% vs. 2019
    10 The target is to have at least 35% of women executives by 2026
    11Including IFRS 9 phasing
    12France and International (including Switzerland and the United Kingdom)
    13 Banking App #1 in France and #2 worldwide based on Sia Partners International Mobile Banking Benchmark in October 2024
    14 At comparable business model in the post Global Financial Crisis (GFC) regulatory regime

    15 Including entities reported under IFRS 5, excluding entities sold in Morocco and Madagascar in December 2024
    16 Excluding non-recurring items on either margins or UCS (mainly linked to fleet revaluation at EUR 107m in Q4 23 vs. EUR 0m in Q4 24, prospective depreciation at EUR -191m in Q4 23 vs. EUR -87m in Q4 24, hyperinflation in Turkey at EUR -27m in Q4 23 vs. EUR -40m in Q4 24 and MtM of derivatives at EUR -137m in Q4 23 vs. EUR -2m in Q4 24)

    17 As stated in Q2 24 results press release
    18 Interest net of tax
    19 Based on the 2024 proposed distribution, subject to usual approvals of the General Meeting
    20 Excluding goodwill arising from non-controlling interests
    21 Interest net of tax
    22 Excluding goodwill arising from non-controlling interests
    23 The number of shares considered is the number of ordinary shares outstanding at the end of the period, excluding treasury shares and buybacks, but including the trading shares held by the Group (expressed in thousand of shares)
    24 The number of shares considered is the average number of ordinary shares outstanding during the period, excluding treasury shares and buybacks, but including the trading shares held by the Group

    Attachment

    The MIL Network –

  • MIL-Evening Report: Unambitious and undermined: why NZ’s latest climate pledge lacks the crucial ‘good faith’ factor

    Source: The Conversation (Au and NZ) – By Nathan Cooper, Associate Professor of Law, University of Waikato

    New Zealand’s Climate Change Minister Simon Watts speaking during the the recent climate summit in Azerbaijan. Sean Gallup/Getty Images

    The announcement of New Zealand’s new climate pledge under the Paris Agreement was met with sharp criticism last week.

    The agreement commits nations to provide a new pledge, known as a Nationally Determined Contribution (NDC) every five years. But it also requires each pledge to be a “progression beyond” the previous one.

    Climate Change Minister Simon Watts announced New Zealand would commit to reducing emissions by 51-55% below 2005 levels by 2035, which is only 1-5% above the current NDC of a 50% cut by 2030.

    Technically, the new NDC represents a progression, albeit the smallest possible one. It was criticised as underwhelming and unambitious to combat climate change, raising the question whether the coalition government has done enough to comply with its international obligations.

    The commitments of each member nation should align with the Paris Agreement’s purpose to hold global average temperature rise well below 2°C above pre-industrial levels and to pursue efforts to keep it at 1.5°C.

    But the agreement also requires that each country’s NDC reflects its “highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in light of different national circumstances”.

    Does the government’s announcement to step up emissions cuts by as little as 1% really represent New Zealand’s highest possible ambition in present circumstances?

    In October last year, looking specifically at New Zealand’s potential domestic contribution to the new NDC, the Climate Change Commission advised that emissions cuts of 66% could be achieved without shrinking the economy.

    This excludes potential additional cuts achieved through offshore mitigation – paying for overseas carbon credits or funding other countries to reduce their greenhouse emissions.

    Clearly, deeper cuts are possible and there is room for significantly greater ambition.

    The goal of the Paris Agreement is to limit climate change impacts by holding temperature rise well below 2°C.
    Fiona Goodall/Getty Images

    Bare minimum commitment

    Even if the new NDC meets a minimal requirement for compliance, it is difficult to see how it adheres to the purpose of the Paris Agreement and the level of ambition required.

    New Zealand’s NDC falls short of the commitments offered by other comparable countries and even some developing nations, including the oil and gas producer Brazil, which pledged to cut its emissions by 59-67% by 2035.

    International law has long been guided by the principle of pacta sunt servanda, which translates to “agreements must be kept”. The principle reminds parties to any agreement or convention that all international obligations should be fulfilled in good faith.

    Viewing New Zealand’s new NDC in the context of other recent decisions, it seems the coalition government may be pursuing policies that could undermine climate action while pledging the bare minimum internationally. This would be difficult to characterise as a party acting in good faith.

    Immediately following the new NDC announcement, Resources Minister Shane Jones unveiled New Zealand’s national minerals strategy, along with a list of critical minerals.
    These documents support the government’s goal to double exports from the mineral sector by 2035.

    Despite reassurance in the strategy that minerals production will not come at the expense of our environment, it includes plans to scale up exports of metallurgical coal. But mining more of this coal, then burning it (usually in the process of steelmaking), will add to greenhouse gas emissions.

    Wider concerns about the likely environmental damage and biodiversity loss linked with fast-tracked mining operations continue to be raised.

    Meeting trade obligations

    Last year’s decision to postpone the entry of agriculture into New Zealand’s Emissions Trading Scheme without a robust alternative means that agricultural emissions continue to avoid effective regulation.

    Even recent measures to allow increased road speed limits have been criticised for increasing greenhouse gas emissions as well as worsening air quality and reducing road safety.

    Despite Prime Minister Christopher Luxon’s claim to be “all about yes” even on climate change, such decisions are difficult to square with a responsible party to the Paris Agreement acting in good faith.

    The Paris Agreement is clear that emissions pledges are not imposed but are to be determined nationally. The agreement itself lacks an enforcement mechanism, but recently agreed trade deals with the European Union and with the United Kingdom both contain binding and enforceable commitments to the agreement.

    This is a reminder that trading partners are already monitoring New Zealand’s climate actions. Consumer attitudes and trade obligations might become a more powerful lever for climate action in the future. No government should ignore this.

    As the US administration begins to withdraw from the Paris Agreement, now more than ever is the time for other countries to stay focused on its purpose and to match national commitments accordingly.

    Without an NDC in line with the Paris goal, New Zealand’s government is not sending the right message to New Zealanders or to our trading partners and neighbours. It is failing to show international and regional leadership at a time when many Pacific nations are on the frontline of climate-related risk and damage.

    Nathan Cooper does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    – ref. Unambitious and undermined: why NZ’s latest climate pledge lacks the crucial ‘good faith’ factor – https://theconversation.com/unambitious-and-undermined-why-nzs-latest-climate-pledge-lacks-the-crucial-good-faith-factor-248877

    MIL OSI Analysis – EveningReport.nz –